TOMRA Systems — Investor Presentation 2018

Sep 21, 2018

TOMRA SYSTEMS ASA CAPITAL MARKETS DAY 2018

TOMRA SYSTEMS ASA Asker, Norway 21.09.2018

TAKING TOMRA TO THE NEXT LEVEL

DID YOU KNOW?

• By 2025 solid waste generation will increase by 70% compared to 2010 levels
• 32% of all plastic packaging made ends up in nature every year
• 20% of plastic packaging could be profitably re-used and 50% could be profitably recycled if designed for after use systems
• Continuing current practices there will be more plastic than fish in the ocean by 2050

DID YOU KNOW?

• By 2050, a global population of 9.8 billion will require 70% more food than is consumed today

• We are currently wasting 33% of global food production

• The food industry is worth more than USD 5 trillion annually

• Agriculture accounts for 20% of global greenhouse gas emissions

Sources: Wrap, WEF, Accenture (Future of Food), McKinsey

WE HAVE STARTED TO REALIZE THE DAMAGING IMPACT OF OUR CONSUMER BEHAVIOR

COMMITMENT TO FINDING SOLUTIONS…

… DRIVES NEW BUSINESS MODELS AND COLLABORATION ACROSS INDUSTRIES

AS THE CIRCULAR ECONOMY MINDSET EVOLVES THE NEED FOR SUSTAINABLE SOLUTIONS IS ACCELERATING

Moving from a Linear Economy…

SIGNIFICANT UNTAPPED POTENTIAL TO REUSE GOOD MATERIALS

weighted average price of 1,100–1,600 USD/t, the total value proposition is in the range of USD 50-80 bn. Please note that this is a conservative estimate based on a narrow definition of total annual plastic packaging volume. Applying a wider definition can increase the value proposition up to USD 170-190 bn.

annually. 70-90% recycling means ~1,100-1,450 mln tonne recycled and 160-480 mln tonne lost. Assuming ~90% yield in process with market price of ~500 USD/t equals USD 70-220 bn, so conservative range USD 70-150 bn

~80 % of produced paper is potentially recyclable, ~400 mln tonne annually x 80% = 320 mln t/a potentially recyclable paper in the market. Today, ~58 % or 230 mln t/a are recycled, means 90 mln tonnes are lost. If this is recovered and goes into the paper recycling process there will be between 10-30% fibre loss, assuming on average 20%. The value of newsprint paper is ~400-600 USD/t, let´s assume 500 USD/t = ~90 mln t/a x 80% x 500 USD/t = USD36 bn

AT THE SAME TIME WE ALSO NEED TO FIND NEW WAYS OF FEEDING A FAST GROWING DEMANDING POPULATION…

To ensure an efficient food production there is an increased need to…

Feeding a demanding, rapidly growing urbanized population brings opportunities for TOMRA

The digital consumer…

88% of the next billion entering the middle class will come from Asia

Increased buying power from a growing and wealthier middle-class…

… AND NEW TECHNOLOGY FOSTERS SMARTER SOLUTIONS

Internet of Things Blockchain

Cyber Security

AI and Machine Learning Increased Automation

More Advanced Sensing

… ENABLES CONTINUED DELIVERY OF VALUE FOR ALL STAKEHOLDERS

Earnings per share and dividend payout in % of EPS

EBITA and margin

THE CIRCULAR ECONOMY - A CATALYST FOR CHANGE

RESOURCES ARE FINITE

• Today: we are paying to get rid of our waste through landfill fees and incineration
• We are wasting perfectly good materials that can be reused
• Tomorrow: The Circular Economy is a driver for change
• Creating value out of waste
• That is what the Circular Economy is all about

Continued ambitious EU regulations and recycling targets: Attracts capital and drives investments

and oceans

From Green Fence to National Sword: Short-term demand for recycling solutions in waste exporting countries

• Limits the import of contaminated recyclable commodities and increases inspections of recyclable commodity imports
• Purity level set to 99.5%

…AND A MARKET PULL

Large companies committing to use recycled raw materials = increased demand for recycled offtake

TODAY, PLASTIC PACKAGING MATERIAL FLOWS ARE LARGELY LINEAR

And the increase in plastic production continues to grow rapidly…

PLASTIC HAS A LOT OF GOOD QUALITIES, BUT WE ARE DROWNING IN IT: LEAVING OPPORTUNITY FOR A MORE SUSTAINABLE INFRASTRUCTURE

THE CIRCULAR ECONOMY DRIVES COLLABORATION ACROSS INDUSTRIES, GOVERNMENTS AND NGO'S

The plastics value chain is changing and trending towards a more collaborative landscape

Source: Ellen McArthur Foundation

The process of transforming waste into product

THE DEPOSIT MARKET OPPORTUNITY

DID YOU KNOW?

• 1 million plastic bottles are bought around the world every minute
• Less than half of all purchased plastic bottles are collected for recycling
• ~ 35bn beverage containers are captured by TOMRA every year…
• …representing only 2.5% of all beverage containers sold in 2017

INCREASING PUBLIC PRESSURE TO REDUCE WASTE AND LITTERING

CLOSING THE PLASTIC PACKAGING LOOP REPRESENTS VAST POTENTIAL

CONTAINER DEPOSIT SCHEME – REAFFIRMED AS A PROVEN SOLUTION

THE BENEFITS OF REVERSE VENDING IN A CONTAINER DEPOSIT SCHEME

KEY MARKET AND CONSUMER TRENDS DRIVE STRUCTURAL CHANGES…

Bag drop solutions, reverse logistics from e-commerce

Bigger chains but smaller stores, self-service

Biodegradable bottles

Beverage producers more proactive to set the scene

Traditional sales and service model with retail stores as key customers

Fee-based model with government, recyclers and scheme operators as key customers

Consumer engagement to drive volume growth

NAVIGATING THE REGULATORY LANDSCAPE

AN OVERVIEW OF CURRENT DEPOSIT MARKETS*

* In addition, some markets have refillable deposit systems such as: Austria, Belgium, Chile, Czech Republic, France, Hungary, Poland and South Korea

DRAFT EU DIRECTIVE SETS AN AMBITIOUS COLLECTION TARGET

Legislative push

"Achieve a 90% collection target of plastic beverage bottles by 2025 for example through a container deposit scheme. "

BEVERAGE PRODUCERS ACTIVELY SEEKING MORE INFLUENCE

Market pull

DESIGNING A DEPOSIT SCHEME – LENGTHY PROCESS FROM IDEA TO LAW

UPCOMING DEPOSIT MARKETS ON THE MOVE

Western Australia

• Beverage containers accounts for 35% of all litter in WA
• Deposit value: 0.1 AUD (150mL 3L)
• Utilize curbside recycling and other existing waste services
• Consultation round ended 10th of September 2018

Scotland

• September 2017, First Minister Nicola Sturgeon announced a deposit return scheme for drink containers
• Aims to increase recycling rates from current levels of 50%
• Ongoing consultation with deadline 25th of September 2018

England

• March 2018, UK Environment Secretary Michael Gove announced plans for a deposit return scheme
• Consultation expected to be released within year end
• No known consultation round deadline

Estimated Startup: Early 2020

Estimated Startup: 1/7/2020

Estimated Startup: 1/1/2021

THE FOOD UNIVERSE- RIPE FOR INNOVATION

FOOD FOR THOUGHT

• By 2050 we will be close to 10bn people
• We will need more food in the next 40 years than all the harvests in history combined
• But farmland is constant – at best
• The food you eat will have travelled more than you have

A DEMANDING CONSUMER DICTATES THE ENTIRE VALUE CHAIN…

… PUSHING TRADITIONAL PRODUCTION TOWARDS INNOVATION…

Need to reduce food waste and promote sustainable farming

Pressure to increase efficiency as current farmland must produce more output

Big data and predictive analysis ready to be deployed into the "Agritech Revolution"

… AND EXPECTS FLEXIBILITY AND AVAILABILITY FROM DISTRIBUTION AT LOW COST

FOOD VALUE CHAIN IS GETTING MORE COMPLEX AND DRIVES THE FOOD MARKET TOWARDS NEW SOLUTIONS

THE CONSOLIDATED FMCG COMPANIES SET A HIGH STANDARD: PROTECTING THEIR BRAND NAME AT ALL COST

AUTOMATION CONTINUES ON A STRONG GROWTH TRAJECTORY

THE ROAD TO SUCCESS – TOMRA STRATEGIC DIRECTION

TODAY INTO TOMORROW: THE WAY FORWARD

Our base business has never been stronger…

…and the roads to success build on our current positioning

Estimated revenue contribution next 5 years

MAKING MEANINGFUL CONTRIBUTION ALONG THE WAY

TOMRA'S ROLE IN AN INCREASINGLY URBANIZED CONNECTED WORLD

Global Challenges

Marine littering	Excess waste generation	Increased need for automation
Securing food	Availability of	Access to raw
supply	farmland	materials

Solutions

Collection and recycling solutions for smart cities	Recycling solutions to secure high quality materials
Growing our food sorting business	Digital offering to clients

COLLECTION SOLUTIONS POSITIONED FOR GROWTH

UNDISPUTED MARKET LEADER WITHIN REVERSE VENDING TECHNOLOGY

…but the competitive landscape is only one part of the picture …because every container deposit scheme is different, requiring us to take on different roles

MOVING FROM A RVM SUPPLIER TO GLOBAL FRONTRUNNER AND THOUGHT LEADER WITHIN CIRCULAR ECONOMY

UTILIZE OUR COMPETITIVE ADVANTAGES TO GENERATE GREATER CUSTOMER VALUE

FLEXIBILITY AND SCALABILITY TO ENABLE NEW BUSINESS MODELS AND NEW MARKET ENTRY

A COMPLETE DIGITAL PORTFOLIO DESIGNED TO WIN

Engage consumers to drive volume in throughput markets

Deliver a convenient and engaging recycling experience for consumers that increase the participation and drive volume through our installations.

A DYNAMIC ORGANIZATION CATERED FOR GROWTH

LEVERAGE EXISTING CAPABILITIES FOR SUCCESS INTO NEW MARKETS

Utilize existing resources and knowledge base and add on local business unit to ensure optimal roll-out

THE NEW SOUTH WALES STORY IN NUMBERS

myTOMRA users registered in NSW since 01.12.2017.

6,9M+ AUD

transferred to PayPal accounts in NSW from myTOMRA since 01.12.2017

37%

litter reduction achieved since 01.12.2017

WINNING IN SORTING

SORTING MARKET GROWTH EXPECTATIONS

MARKET DEFINITION RECYLING

Sensor-based sorting equipment

• Excluding cullet glass sorting
• Excluding peripheral equipment and turn-key solutions

MARKET DEFINITION FOOD

Sensor-based sorting and grading equipment

• Including color sorting
• Excluding peripheral equipment and turn-key solutions

Fresh and processed segment

2018 2022

THE BENEFITS OF BEING TOMRA SORTING

+100 more known competitors

Our position: A solid platform for further growth

RATIONALE FOR HISTORIC INVESTMENTS IN THE PERIOD: BUILDING A UNIQUE POSITIONING IN THE FOOD UNIVERSE

Building a strong platform as the leading player in food… …while adding attractive topline growth for TOMRA

HOW TO WIN: OFFER THE BEST SOLUTION AND CUSTOMER EXPERIENCE

NEW SENSOR TECHNOLOGIES WILL UNLOCK NEW OPPORTUNITIES…

From measuring visual appearance...

… to measuring

Internal defects

Taste

Shelf life / Freshness

Food hazards

… AND ARTIFICIAL INTELLIGENCE WILL PAVE THE WAY FOR EVEN MORE INTELLIGENT SORTING EQUIPMENT

Visual Spectrum

Classification of various waste objects

ENTERING NEW MARKETS THROUGH MID-MARKET STRATEGY

Creating competitive offering to fast growing mid-market

DIGITALIZATION IS DIFFERENTIATION THROUGH KNOWLEDGE

RECYCLING: INDUSTRIALIZING THE PROCESS FOR RECYCLED PLASTIC

GOALS

• Create a demand for the plastic through a process
• Output to be of high quality in order to replace virgin material
• Extract plastics from all waste streams (incl. landfill and incineration) to satisfy demand
• Feasibility proven, working with multiple partners on commercialization

FOCUS AREAS TO DELIVER ON THE STRATEGIC PLAN

Where to focus:

OUR CUSTOMERS

OUR PEOPLE

DEVELOP DIGITAL SOLUTION CONTINUED FOCUS ON R&D OPERATIONAL EFFICIENCY

GROUP FINANCIAL TARGETS AND OUTLOOK

GROUP FINANCIALS DEVELOPMENT – SOLID TRACK RECORD

EBITA and margin 0% 5% 10% 15% 20% 0 200 400 600 800 1000 1200 2013 2014 2015 2016 2017 MNOK

Gross contribution and margin

Return on capital employed (ROCE)

⁷⁵ *EBITA / Net assets (Net assets = Total assets less cash, investments in associates, intangibles and non-interest bearing debt) Calculated on an yearly average.

**EBITA / Net assets (Net assets = Total assets less cash, investments in associates and non-interest bearing debt) Calculated on an yearly average.

DELIVERY ON THE 2013-2018 FINANCIAL TARGETS

		Ambitions	Target	Actual
		Revenue growth for the period	4-8%	10.1%
		EBITA-margin	18-23%	18.2%

Revenue growth for the period	10-15%	18.9%
EBITA-margin	18-23%	12.0%

MAINTAINING A SOLID BALANCE SHEET WITH STEADY CASH GENERATION

Breakdown of the cash flow statement

Solidity and leverage

Cash from operations on a monthly basis -100 100 300 500 700 900 1,100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec MNOK 2015 2016 2017 2018

Earnings per share and dividend payout

A COMMENT ON THE CAPITAL EXPENDITURE NEEDS

Illustrative revenue profiles for the two main type of container deposit schemes

HEADROOM FOR SIGNIFICANT GEARING OPPORTUNITIES

						Highly
Financial risk profile -- Core ratios --	Minimal	Modest	Intermediate	Significant	Aggressive	leveraged	TOMRA*
FFO / Debt	> 60%	45-60%	30-45%	20-30%	12-20%	12% >	71%
Debt / EBITDA	< 1.5x	1.5-2x	2-3x	3-4x	4-5x	5x <	1.2x
-- Supplementary ratios --
FFO / Cash interest	> 13x	9-13x	6-9x	4-6x	2-4x	2x >	19x
CFO / Debt	> 50%	35-50%	25-35%	15-25%	10-15%	10% >	65%
FOCF / Debt	> 40%	25-40%	15-25%	10-15%	5-10%	5% >	28%

Gearing can be increased considerably while maintaining "Investment Grade"

Business risk profile	Minimal	Modest	Intermediate	Significant	Aggressive	Leveraged
Excellent	AAA/AA+	AA	A+/A	A-	BBB	BBB-/BB+
Strong	AA/AA-	A+/A	A-/BBB+	BBB	BB+	BB
Satisfactory	A/A-	BBB+	BBB/BBB-	BBB-/BB+	BB	B+
Fair	BBB/BBB-	BBB-	BB+	BB	BB-	B
Weak	BB+	BB+	BB	BB-	B+	B/B
Vulnerable	BB-	BB-	BB-/B+	B+	B	B

Maturity profile for available credit facilities

Highly

GROUP FINANCIAL TARGETS 2018-2023 – OUR AMBITIONS AFFIRMED

CONCLUDING REMARKS AND Q&A

THE CIRCULAR ECONOMY AND THE TOMRA CLOSED LOOP

TOMRA's solutions enable a more predictable offtake of high quality recycled materials for same purpose use: Creating the market

TOMRA TO PLAY A DIFFERENCE IN THE FUTURE OF FOOD PRODUCTION

TOMRA's solutions enable improved yield for the producers and sellers of food, as well as reduction of food waste post sorting/grading

Copyright

The material in this Document (which may be a presentation, video, brochure or other material), hereafter called Document , including copy, photographs, drawings and other images, remains the property of TOMRA Systems ASA or third party contributors where appropriate. No part of this Document may be reproduced or used in any form without express written prior permission from TOMRA Systems ASA and applicable acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction

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 trade mark 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