TOMRA Systems — Investor Presentation 2021

Feb 23, 2021

Investor Presentation

TOMRA Systems ASA 23.02.2021 © TOMRA

We live in an age with the highest level of consumption our planet has ever seen

Using more resources than ever before. More than our planet can continue to sustain.

TOMRA is well-positioned towards megatrends

3 Solutions for optimal resource productivity

4 Strong financial performance, people & culture

Revenues

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

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Only 2% of the planet's annual plastic packaging production is reused for the same/similar products

Significant untapped potential in reusing materials

With a volume yield of 72% and a 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.

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 90 mln tonnes are lost. If this is recovered and goes into the paper recycling process there will be between 10-30% fiber 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

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Circular economy – redefining value creation

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 accounts for around 10% of global GDP

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• Agriculture accounts for 20% of global greenhouse gas emissions

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

New ways of feeding a fast-growing DEMANDING population…

…AUTOMATE…CONTROL…AND INNOVATE

TOMRA plays an integral part in the food value chain

At TOMRA, our company vision is Leading the Resource Revolution

It is our belief that businesses have the power, responsibility, and vested interest to help manage our planet's precious resources—today and tomorrow.

Some of the biggest global challenges are TOMRA's business opportunities

Stefan Ranstrand President and CEO Tomra Group

TOMRA AT A GLANCE

Creating value through three strong business areas

Food Recycling Mining Collection

Food Recycling Mining Collection

The TOMRA transformation journey

Helping the world recycle

Strong revenue growth in Recycling, Mining and Food

• Average annual organic growth for the same period was ~15%
• Technology base and segment/application knowledge expanded both through acquisitions and in-house ventures

TOMRA's three business areas

	TOMRA COLLECTION SOLUTIONS	TOMRA RECYCLING MINING	TOMRA FOOD
	REVERSE VENDING	RECYCLING	PROCESSED FOOD
Share of '20 sales	~40%	~14%	~19%
Employees	1,705	487	800
Customers	Grocery retailers	Material recovery plants, scrap dealers, metal shredder operators	Food growers, packers and processors
Market share	Over 70%	~55-60%	~30%
	MATERIAL RECOVERY	MINING	FRESH FOOD
Share of '20 sales	~10%	~3%	~14%
Employees	599	78	611
Customers	Grocery retailers and beverage manufacturers	Mining companies	Food growers, packers and processors
Market share	~60% in USA (markets served)	~40-50%	~25%
	TOMRA GROUP FUNCTIONS
Employees	27

Strengthened presence in China

TOMRA COLLECTION SOLUTIONS

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
• More than 40bn beverage containers are captured by TOMRA every year…
• …representing only less than 3% of all beverage containers sold in 2018

But the tides are shifting. There is a desire for change

Consumer demand for responsible plastic use options

Legislative push for new plastic waste strategies

Market pull from large brand owners and beverage companies

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

Upcoming deposit markets on the move

North America: Possible expansion of existing deposit systems

Scotland: Container Deposit Scheme to planned to start July 2022

England:

Announced plans for a deposit scheme to reduce plastic pollution. Ongoing consultation

Latvia: Deposit Return System to be implemented February 2022

Slovakia: Deposit Return System to be implemented January 2022

Australia:

NSW introduced deposit from December 2017 QLD introduced deposit from November 2018 WA introduced deposit from October 2020

Collection target for plastic bottles:

• 77% by 2025
• 90% by 2029

Recycled content in product design:

• 25% by 2025 in PET bottles
• 30% by 2030 in all plastic bottles

EU Single-Use Plastic Directive: Targets on recycled content and collection target for plastic bottles. Deposit scheme mentioned as a mean to reach those targets.

Deposit return systems are extremely effective at capturing items for recycling

Compiled from deposit System Operators and "PET Market in Europe: State of Play," Eunomia. 2020. Data available upon request.

¹ Aluminum, Glass, Plastic.. "Beverage Market Data Analysis 2017," Container Recycling Institute. 2020.

² Michigan and Oregon. Bottlebill.org. 2021

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High collection rates achieved in two years' time

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The centralized DRS model: How it works

system for reaching the legislated return-rate target.

Reinvestment of unredeemed deposits and material revenue within the system

In Norway over 80% of the system's costs are covered by unredeemed deposits and material revenue

Profit and loss overview of Norway's Central System Administrator (2019)

Recycled content requirements complement deposit return systems

Market values for recycled material are volatile, making investment in collection/recycling risky

Lack of a stable market leads to a lack of supply for high-quality recycled material

Content requirements raise and stabilize a key funding stream for the DRS: commodity value

DRSs ensure containers consumed in a region are collected for recycling

Recycled content requirements ensure new bottles are made from recycled material

The four principles of high-performing deposit return systems

A collection target for a broad scope of beverage packaging plus a meaningful deposit delivers strong results.

The redemption system is easy, accessible and fair for everyone.

PERFORMANCE CONVENIENCE PRODUCER RESPONSIBILITY SYSTEM INTEGRITY

Producers manage, finance and invest in the system with use of unredeemed deposits and commodity revenues.

Trust is built into the system's processes through transparent management, a data-driven clearinghouse, and reliable redemption technology.

Reverse vending technology in a high performing DRS

User communication

Recognition system

Business model expertise across deposit systems

A "split-responsibility" model is when a network operator provides redemption points and ensures recycling

Cash flow profiles of the two business models

Illustrative cash flow profiles per machine

Flexibility and scalability to enable new business models and new market entry

CONTAINER VOLUME

Advanced digital platform leveraged across stakeholder groups

Market leader in reverse vending solutions

Source: TOMRA estimates and analysis

TOMRA RECYCLING MINING

How does sensor-based separation work?

High-speed processing of information (material, shape, size, color, defect, damage and location of objects)

Automation with TOMRA Sorting units

A common sensor-based technology portfolio

	RECYCLING	MINING	FOOD
ELECTROMAGNETIC SENSOR (EM) Electro-magnetic properties like conductivity and permeability	X	X	X
LED SPECTOMETRY (LED) Color and spectral properties based on multiple LED light sources in very high optical resolution	X	X	X
NEAR-INFRARED SPECTROSCOPY (NIR) Specific and unique spectral properties of reflected light in the near-infrared spectrum	X	X	X
VISIBLE LIGHT SPECTROMETRY (VIS) Specific and unique spectral properties of reflected light in the visible spectrum	X	X	X
X-RAY TRANSMISSION (XRT) Atomic density irrespective of surface properties and thickness	X	X	X
LASER INDUCED BREAKDOWN SPECTROSCOPY (LIBS) Elemental composition	X
X-RAY FLUORESCENCE (XRF) Elemental composition	X	X
INFRARED TRANSMISSION (IRT) Density and shape properties by light absorption			X
IR CAMERA (IR) Heat conductivity and heat dissipation			X
COLOR CAMERA (COLOR) Color properties measured in very high optical resolution	X	X	X
LASER REFLECTION/FLUORESCENCE (LASER) Structural, elemental and biological properties by reflection, absorption and fluorescence of laser light	X	X	X

Recycling: applications and sensor technology

MUNICIPAL SOLID WASTE

Hard plastics, plastic film, mixed paper, RDF, metals, organics/biomass

NIR, VIS, XRT, LASER

NF metal, stainless steel, copper cables, copper, brass, aluminum

NIR, VIS, XRT, XRF, EM, COLOR

Plastics, plastic film, cardboard, mixed paper, deinking paper, metal

NIR, VIS, EM

POST-SHREDDER ELECTRONIC SCRAP PAPER

Printed circuit boards, non-ferrous metal concentrates, cables, copper, brass, stainless steel

XRT, XRF, EM, NIR, COLOR

PACKAGING UPGRADING PLASTICS

PET, PE, PP, flakes

NIR, VIS, EM

Deinking, cardboard, carton

NIR, VIS, EM

Mining: applications and sensor technology

INDUSTRIAL MINERALS DIAMONDS FERROUS METALS

Phosphate-silica removal, limestone-silica removal, quartz upgrade, MgO² -silica removal, fluorite pre-conc., talc pre-conc., lithium pre-conc., barite pre-conc.,

COLOR, XRT, NIR

NON-FERROUS METALS FUEL SLAG

Copper, zinc, gold, nickel, tungsten, silver, platinum group metals

XRT, COLOR, EM, NIR

Kimberlite-waste removal, diamond ROM conc., diamonds final recovery, emeralds ROM conc., rubies ROM conc.

COLOR, XRT, NIR

Coal waste dumps

XRT

Iron ore grading, hematite preconc., manganese pre-conc., chromite pre-conc.

XRT, EM, NIR

Stainless steel slag, ferro silica slag, ferro chrome slag

XRT, EM

FIRST-CLASS CUSTOMER SERVICE WORLDWIDE

for highest sorting performance for lowest downtime for plannable costs

Having the best systems in the world is not enough without a dedicated service team to keep them running in top condition.

Watch the video

TOMRA INSIGHT

TOMRA Insight wants to unlock the value of data being generated by our sorters, allowing our customers to:

Maximize throughput/ yield

Better utilization of the sorters, e.g. material distribution

Sort to target qualities

Better understand your product going through the machines, e.g. continuous sampling vs. manual samples, different accuracy of course

Reduce downtime Faster maintenance, less unplanned stops

Reduce operational cost

Simplifying spare part ordering, access to documentation, …

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Recycling: competitive landscape

TOMRA competitive positioning

• Largest installed base
• Highest revenues
• Broadest technology platform on WR
• Highest number of applications and markets served
• Leading brand
• Market share: 55-60%

Mining: competitive landscape

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

The circular economy drives a legislative push…

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

"A common EU target for recycling 70% of packaging waste by 2030"

The Strategy also highlights the need for specific measures, possibly a legislative instrument, to reduce the impact of single-use plastics, particularly in our seas 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%

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…promoting recycling

		Description	Targets and measures
	Waste Framework Directive	• Rules on how waste should be managed in the EU. It provides general principles for doing so, such as the Waste Hierarchy, Polluter Pays Principle and Extended Producer Responsibility.	• A common EU target for recycling 60% of municipal waste by 2030 • A common EU target for recycling 70% of all packaging waste by 2030
E G A K C A P Y M	Packaging and Packaging Waste Directive	• Rules on the production, marketing, use, recycling and refilling of containers of liquids for human consumption and on the disposal of used containers • 2015 revision includes lightweight plastic carrier bags	• A common EU target for recycling 55% of all plastics by 2030 • A binding landfill target to reduce landfill to maximum of 10% of
O N O C E R A L	Waste Electrical and Electronic Equipment (WEEE) Directive	• Collection, recycling and recovery targets for all types of electrical goods • 10 categories: Large household appliances, Small household appliances, IT and telco equipment, Consumer equipment, Lighting equipment, Electrical and electronic tools, Toys, Leisure and sports equipment, Medical devices, Monitoring and control instruments, Automatic dispensers	municipal waste by 2030 • Minimum requirements are established for extended producer responsibility schemes • Simplified and improved definitions
U C R CI 8 1 0 2	Landfill Directive	• The objective of the Directive is to prevent or reduce as far as possible negative effects on the environment from the landfilling of waste • In particular: impact on surface water, groundwater, soil, air, and on human health by introducing stringent technical requirements for waste and landfills.	and harmonized calculation methods for recycling rates • Concrete measures to promote re use and stimulate industrial symbiosis
	End of Life Vehicle (ELV) Directive	• Aims at reduction of waste arising from end-of-life vehicles • The scope of the directive is limited to passenger cars and light commercial vehicles	• Economic incentives for producers to put greener products on the market and support recovery and recycling schemes

…and a market pull

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

Recycling: market growth expectations

MARKET DEFINITION RECYLING

Sensor-based sorting equipment

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

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INTELLIGENT MINE

• Mining is an old industry. But chances are that it will it look very different in 10 years time
• Energy intensity and water stress are major drivers…
• …for disruptive technology forces to reshape the industry
• Commodity prices and capex impact the investment sentiment

The concept of sensor-based sorting in mining

Mining process: Industrial minerals

• 15% to 50% of the ROM can be rejected in an early stage of the process (application dependent)
• These low grade waste rocks don't need to be transported, crushed, grinded or further treated

Mining process: Metal mining

Current segment Potential new segment

Mining: market growth expectations

Total annual market size

MARKET DEFINITION MINING

Sensor-based sorting equipment

• is still a technology to be accepted
• growth is conditional on new applications and technologies being developed

TOMRA FOOD

FOOD FOR THOUGHT

• 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

Automation continues on a strong growth trajectory

Creating value in various parts of the food process

Food: applications and sensor technology

Chips, French fries, peeled, specialty products, sweet potatoes, unpeeled, washed

LASER, CAMERA, BSI, PULSED LED

corn, cucumbers, industrial spinach, IQF vegetables, jalapenos/peppers, onions, peas, pickles

LASER, CAMERA, BSI, PULSED LED

Beans, beets, broccoli, carrots,

Almonds, cashews, hazelnuts, macadamias, peanuts, pecans, pistachios, walnuts

LASER, CAMERA, X-RAY

Apricots, cranberries, dates, figs, prunes, raisins

LASER, CAMERA, BSI, X-RAY

SEEDS & GRAINS

Barley, coffee, corn, dry beans, lentils, oat, pulses, pumpkin, sunflower and watermelon seeds, wheat

LASER, CAMERA, BSI, X-RAY

Apples, blackberries, blueberries, cherries, cranberries, peaches & pears, raspberries, strawberries, tomatoes

LASER, CAMERA, BSI, PULSED LED

Baby leaves, iceberg lettuce, spinach, spring mix

LASER, CAMERA

Mussels, scallops, seaweed, shrimps, tuna, pet food

LASER, CAMERA, BSI, X-RAY, INTERACTANCE SPECTROSCOPY

PROTEIN

Bacon bits, beef, chicken breasts, hot dogs, IQF meat, pork, pork rind, sausages, pet food

LASER, CAMERA, BSI, INTERACTANCE SPECTROSCOPY

Gummies, Tobacco

LASER, CAMERA

Our products are detecting a wide range of parameters

Shape & Size

Biometric Characteristics Sort based on water content and removal of mycotoxin contaminations

broken-piece recognition, …

Sort on length, width, diameter, area,

Color Removal of discolorations in monoand mixed-color material

Blemishes

Objects with spots or other (small) blemishes are removed

Defects Removal of visible and invisible small and substantial defects

Structure Removal of soft, molded or rotten food

Density Detection of density differences

Damage Broken, split and damaged objects are detected and removed

Detox Removal of produce contaminated with aflatoxin

Foreign Material Removal of foreign material in a material stream, e.g. insects, worms, snails or plastics in food applications

X-RAY

Fluo

Analysis of objects based on their density and shape

Visible Invisible Both

New sensor technologies will unlock new opportunities…

• From measuring visual appearance...

Top Food Categories

Three ways of sorting within the Food segment

Free fall (Channel / Chute)
Application	Seeds, rice, grains
Sensor tech.	Camera (simple)
Revenue share*	Approx. 60%

Belt
Application	Prepared /preserved veg. and fruit
Sensor tech.	Several (complex)
Revenue share	Approx. 20%

Application Fresh produce

Revenue share Approx. 20%

Sensor tech. Several (medium)

On belt inspection

Lane grading

TOMRA
--------------	--

Lane

TOMRA has established the broadest footprint within food sorting

Food competitive landscape

Belt

TOMRA competitive positioning

• Size (revenues)
• Widest range of applications (150+)
• Broadest technology base
• Geographic reach (~80 countries)

Global Leader

Our food sorting customers

PROCESSED FOOD INDUSTRY FRESH PRODUCE INDUSTRY

TOMRA Food Locations

Market growth expectations – food

HISTORICAL GROUP FINANCIALS AND TARGETS

Group financials development – solid track record

EBITA and margin

Gross contribution and margin

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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	45 %	15 %	10 %	30 %	100 %
Liabilities	55 %	15 %	10 %	20 %	100 %
¹ EUR includes DKK		² Most important: AUD, NZD, RMB, CAD, SEK, GBP and JPY			NOTE: Estimated and rounded figures

10% change in NOK towards other currencies will impact:

	Revenues	Expenses	EBITA
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

Financial highlights | Balance sheet and cash flow

		31 December
Amounts in NOK million	2020	2019
ASSETS	10,977	10,868
Intangible non-current assets	3,846	3,788
Tangible non-current assets	2,371	2,330
Financial non-current assets	353	406
Inventory	1,492	1,596
Receivables	2,383	2,288
Cash and cash equivalents	532	460
LIABILITIES AND EQUITY	10,977	10,868
Equity	5,591	5,247
Lease liabilities	1,104	1,102
Interest-bearing liabilities	1,414	1,880
Non interest-bearing liabilities	2,868	2,639

Cashflow from operations

• All time high cash flow of 890 MNOK in the fourth quarter (600 MNOK in fourth quarter 2019)

Solidity and gearing

• 51% equity ratio
• NIBD/EBITDA (Rolling 12 months)
• o 0.5x without IFRS 16 / 0.9x including IFRS 16

Dividend

o The Board proposes an ordinary dividend of NOK 3.00 per share, up from NOK 2.75 last year

TOMRA Collection Solutions – segment financials

Gross contribution and margin

EBITA and margin

TOMRA Recycling Mining – segment financials

TOMRA Food – segment financials

Our ambitions 2018 - 2023

Circular Economy

Future of Food

Shareholder structure

	Top 10 shareholders as of 31 December 2020
1	Investment AB Latour	31 200 000	21,1 %
2	State Street Bank and Trust Comp	11 972 532	8,1 %	(NOM)
3	Folketrygdfondet	11 598 748	7,8 %
4	The Bank of New York Mellon SA/NV	11 083 074	7,5 %	(NOM)
5	J.P. Morgan Bank Luxembourg S.A.	6 255 214	4,2 %	(NOM)
6	Clearstream Banking S.A.	6 221 421	4,2 %	(NOM)
7	CACEIS Bank	5 840 350	3,9 %	(NOM)
8	Citibank, N.A.	5 224 284	3,5 %	(NOM)
9	JPMorgan Chase Bank, N.A., London	5 021 273	3,4 %	(NOM)
10	The Bank of New York Mellon	4 475 270	3,0 %	(NOM)
	Sum Top 10	98 892 166	66.8%
	Other shareholders	49 127 912	33.2%
	TOTAL (10.380 shareholders)	148 020 078	100.0%

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 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