Bong

Quarterly Report • Jul 12, 2018

The second quarter of the year had a strong sales development and Bong has continued to move its position forward on the European envelope market. The sales of light packaging also showed good growth in the second quarter compared to the same period last year, and Bong see several interesting opportunities to continue to grow in this area. In order to compensate for the increased raw material costs Bong has successfully implemented sales price increases to customers, which will improve the margins during the coming quarters, says Bong's CEO Håkan Gunnarsson.

April – June 2018

• Net sales increased to SEK 543 million (481)
• Operating profit before depreciation increased to SEK 21 million (19)
• Operating profit increased to SEK 10 million (7)
• Non-recurring items in operating profit amounted to SEK 4 million (0)
• Non-recurring items in the finance net amounted to SEK -10 million (0)
• Earnings after tax amounted to SEK -17 million (-8)
• Earnings per share amounted to SEK -0.08 (-0.04)
• Cash flow after investing activities amounted to SEK -48 million (-15)
• The work to refinance Bong's bond has started in line with previous communication

January – June 2018

• Net sales increased to SEK 1,081 million (1,026)
• Operating profit before depreciation decreased to SEK 44 million (49)
• Operating profit decreased to SEK 20 million (26)
• Non-recurring items in operating profit amounted to SEK 2 million (0)
• Non-recurring items in the finance net amounted to SEK -10 million (0)
• Earnings after tax amounted to SEK -21 million (-5)
• Earnings per share amounted to SEK -0.11 (-0.03)
• Cash flow after investing activities amounted to SEK -46 million (7)

Key Ratios MSEK	Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jul 2017- Jun 2018	Jan-Dec 2017
Net sales	543	481	1,081	1,026	2,151	2,095
EBITDA	21	19	44	49	86	91
Non-recurring items	4 1)	0	2 2)	0	-3 3)	-5 4)
Adjusted EBITDA	17	19	42	49	90	96
Adjusted EBITDA - margin. %	3.1%	3.9%	3.9%	4.8%	4.2%	4.6%
EBIT	10	7	22	26	41	45
Non-recurring items, financial net	5) -10	-	5) -10	-	5) -10	-
EBT	-13	-4	-12	3	-14	1
Adjusted EBT	-3	-	-2	-	-4	-
Earnings after tax	-17	-8	-21	-5	-25	-9
Earning per share. SEK	-0.08	-0.04	-0.11	-0.03	-0.14	-0.06
Cash flow after investing activities	-48	-15	-46	7	-13	40
Equity/ asset ratio. %	42.3%	43.9%	42.3%	43.9%	42.3%	42.8%

1) Capital profit building/land SEK 4 million

2) Capital profit building/land SEK 4 million, restructuring cost SEK -2 million

3) Capital profit building/land SEK 4 million, restructuring cost SEK -7 million

4) Restructuring costs SEK -5 million

5) Divestment Postac LLC SEK -10 million (see page 4)

Net debt Cash flow after investing activities - Q2 Equity ratio Operating profit/loss - Q2 Net sales - Q2

This is the Bong Group

Bong is one of the leading providers of specialty packaging and envelope products in Europe and offers solutions for distribution and packaging of information, advertising materials and lightweight goods. Important growth areas in the Group are packaging within retail and e-commerce and the envelope market within Eastern Europe. The Group has annual sales of approximately SEK 2.1 billion and about 1,400 employees in 12 countries.

Bong has strong market positions in most of the important markets in Europe and the Group sees interesting possibilities for continued development. Bong is a public limited company and its shares are listed on Nasdaq Stockholm (Small Cap).

Production and sales

Market and industry

Envelope

During the first half year of 2018, Bong estimates that the European envelope market volume has decreased by approximately 7% compared to the same period previous year. Bongs sales during the same period increased with approximately 1%.

Raw material prices have increased continuously since 2016 as a direct result of the decreased capacity at the paper suppliers, and the price increase of pulp. Continued price increases by Bong into the market is therefore necessary, in order to compensate for the increase of raw material costs. Bong has been successful in compensating for these increases in the past.

During the first half of the year a significant restructuring of the envelope market has taken place. In the Nordic market InterMail has taken the decision to close its envelope production and enter into an agreement with Bong where Bong will help to continue to serve InterMail customers. GNE has left the UK market after being acquired by Encore. Pocheco in France are making 70 employees redundant as a result of the continued decrease in the market. Restructuring measures are also taken in Germany by Mayer Group as they are closing a factory in Düren. Bongs estimation is that the restructuring process and consolidation of the industry will continue.

Light Packaging

The light packaging market is large and fragmented market which is growing. Light packaging represents approximately 20% of Bongs annual sales and during the first half year of 2018 Bongs sales of light packaging products has increased with 8% compared with the same period previous year. With the E-commerce segment Bongs sales of air bubble bags and padded bags are increasing. The benefit of these products are that they can be sent directly to the recipient instead of being collected at the distribution centers. This reduces the shipping cost and at the same time increases the customer benefit. Bong is engaged in product development within e-commerce in order to develop additional product solutions that will satisfy the customer needs.

Within the Retail segment (for example clothing- and cosmetic stores), Bong is mainly selling gift bags and paper carrier bags with exclusive and customer unique prints. Sales of paper carrier bags benefit from the EU-directive from 29 April 2015 aimed at reducing the use of plastic bags in Europe. Many customers are replacing their plastic carrier bags for paper carrier bags and during the first half year of 2018 sales increased with approximately 30%. Sales of gift bags have decreased during the first half year as some larger customers have placed some of their orders during the second half of the year. In order to further expand its offer in paper carrier bags and gift bags, Bong has invested SEK 4 million in an embossing and hot foil machine that will be put into operation during the third quarter of 2018.

Sales and profit

January – June 2018

Consolidated sales for the period reached SEK 1,081 million (1,026). Exchange rate fluctuations had a positive impact on sales of SEK 42 million compared with 2017.

Operating profit decreased to SEK 22 million (26). During the period operating profit was affected negatively by a non-recurring item of SEK -2 million attributable to the French operations. During the same period 2017 operating profit was affected by a non-recurring profit of SEK 5 million attributable to renegotiated pension agreements in Norway. Exchange rate fluctuations for the period had a positive impact on operating profit of SEK 1 million.

The deal to take over Intermail's envelope customers have been finalized during the period and had a positive impact on sales of approximately SEK 30 million.

Net financial items for the period amounted to SEK -33 million (-23) and includes a non-recurring item of SEK -10 million attributable to the sale of Bongs remaining 50% ownership in Postac LLC in Russia (see separate description below).

Earnings before tax amounted to SEK -12 million (3) and reported earnings after tax were SEK -21 million (-5).

Bong's total light packaging sales amounted to SEK 201 million (186). Currency fluctuations had a positive impact on light packaging sales of SEK 8 million compared with the corresponding period in 2017.

Sales and profit

April – June 2018

Consolidated sales for the period reached SEK 543 million (481). Exchange rate fluctuations had a positive impact on sales of SEK 29 million compared with 2017.

Operating profit increased to SEK 10 million (7). During the period operating profit was affected positively by a realized capital gain of SEK 4 million attributable to the sale of a warehouse in Kristianstad. Gross margin was affected negatively by price increases on fine paper where price increased to customers have not taken full effect as well as increased transportation costs. Exchange rate fluctuations for the period had a positive impact on operating profit of SEK 0.5 million.

The deal to take over Intermail's envelope customers had a positive impact on sales of approximately SEK 25 million.

Net financial items for the period amounted to SEK -23 million (-12) and includes a non-recurring item of SEK -10 million attributable to the sale of Bongs remaining 50% ownership in Postac LLC in Russia (see separate description below).

Earnings before tax amounted to SEK -13 million (-4) and reported earnings after tax were SEK -17 million (-8).

Bong's total light packaging sales amounted to SEK 104 million (89). Currency fluctuations had a positive impact on light packaging sales of SEK 5 million compared with the corresponding period in 2017.

Cash flow and investments

The cash flow after investing activities decreased to SEK -46 million (7)

compared to previous year. Cash flow from operating activities before changes in working capital amounted to SEK -6 million (5). Working capital had a negative impact on the cash flow of SEK -44 million (4) of which approximately SEK 15 million is an instantaneous inventory increase attributable to the take-over of inventory from InterMail and movement of production between the companies in UK. Price increases of fine paper affect the development of the inventory. Restructuring programs had negative impact on the cash flow of SEK -7 million (-13). Net investments in the period had a positive impact amounting to SEK 4 million (-2).

Financial position

Cash and cash equivalents at 30 June 2018 amounted to SEK 85 million (SEK 124 million at 31 December 2017, including the escrow account of SEK 21 million). In connection with divestment of a building in Kristianstad, part of the escrow account was terminated and SEK 20 million was transferred to another bank account. The Group had unutilized credit facilities of SEK 8 million on the same date. Total available cash and cash equivalents thus amounted to SEK 94 million (SEK 137 million at 31 December 2017, including the escrow account of SEK 21 million). Consolidated equity at the end of June 2018 was SEK 713 million (SEK 696 million at 31 December 2017).

Translation of the net asset value of foreign subsidiaries to Swedish krona and changes in the fair value of pension debt and derivative instruments increased consolidated equity by SEK 39 million. The interest bearing net loan debt amounted to SEK 335 million, whereof pension debt amounts to SEK 222 million (SEK 294 million at 31 December 2017, whereof pension debt amounts to SEK 212 million).

The work to refinance Bong's bond, expiring in December 2018, has started in line with previous communication.

Employees

The average number of employees during the period was 1,443 (1,467). The Group had 1,449 (1,462) employees at the end of June 2018. Bong has intensively worked on improving productivity and adjusting staff to meet current demand and the reduction is the result of the implemented restructuring measures.

Parent Company

The Parent Company's business extends to management of operating subsidiaries and certain Group management functions. Sales were SEK 1.7 million (1.7) and earnings before tax for the period were SEK -11 million (-11).

Divestment of remaining ownership in Postac LLC in Russia

During April 2018, Bong discontinued its remaining 50 percent ownership of Postac LLC in Russia. The shares was sold to former partner Mikhail Lokotkov. The reasons for the sale were that the Russian company lacked synergies with other Bong companies in the Group, and an unstable market in Russia with strong fluctuations. The purchase price of approximately SEK 16 million will be obtained over a three-year period beginning in the third quarter of 2018. During this period, Bong will continue to use Postac LLC as a supplier and the proceeds from that sale shall be used by Postac LLC to pay the purchase price. In connection with the divestment, an accumulated negative currency rate effect from other comprehensive income is reclassified to the income statement of approximately SEK -12 million. The consolidated profit from the sale of the shares amounted to SEK 2 million and the total negative effect on earnings was thus SEK -10 million, which had no cash flow impact. The loss of approximately SEK 10 million has been classified as a financial expense since the company has been governed by local Russian management since 2015 and not Group management for Bong. The company has not incurred any group expenses as other companies in the Group. Bong decided to stay as a finance officer until the lending was finally regulated, which occurred at the end of 2017 and after that the company was sold.

Events after the end of the period

No material events have occurred after the end of the period.

Risks and opportunities

Business risks for the Bong Group are primarily related to market development and various types of financial risks. There has not been any change to significant risks and uncertain positions since Bong's annual report for 2017 was released. For further information, please refer to Bong's annual report and website bong.com.

Accounting policies

This interim report has been prepared in accordance with IAS 34, Interim Financial Reporting, and the Swedish Annual Accounts Act. Application was consistent with the accounting principles outlined in the 2017 annual report and the interim report should be read along with those principles.

NEW ACCOUNTING STANDARDS THAT CAME INTO FORCE IN 2018 IFRS 9 Financial instruments

As of January 1, 2018, Bong applies IFRS 9. Bong applies the new standard and in accordance with the transitional rules of the standard, which means that Bong has chosen not to recalculate the comparative figures for 2017.

The principles in IFRS 9 for valuation of financial assets depends on how they are classified. Classification of financial assets depends on the Group's business model (purpose of the financial asset) and the financial asset's contractual cash flow. According to IFRS 9, categories of financial assets are as follows:

• Financial assets valued at accrued acquisition value
• Financial assets measured at fair value through other comprehensive income
• Financial assets measured at fair value through profit or loss

For Bong, there are no significant changes in the valuation of financial assets since the valuation bases were already accrued cost or fair value. Bong's financial assets consist largely of accounts receivable and liquid assets.

For financial liabilities, they are valued at accrued acquisition value or fair value through profit or loss. Bong's total liabilities are valued at accrued acquisition value, similar to previous accounting principles.

Write-down of financial assets

IFRS 9 requires that a reservation be made for expected credit losses on financial assets valued at accrued acquisition value. At each balance sheet date, the loss reserve is valued at an amount corresponding to the expected credit losses for the remaining maturity. Bong's financial assets consist essentially of accounts receivable. According to IFRS 9, there are simplification rules applied by Bong, which means that the loss reserve is valued at an amount that takes into account remaining maturity. Valuation of expected credit losses is intended to take into account the risk of losses in non-accrued customer receivables. Bong mainly bases the calculation of expected loan losses on an individual assessment of the current claim together with information about historical losses for similar assets and counterparties as well as a forward adjustment.

IFRS 15 Income from agreements with customers

As of January 1, 2018, Bong applies IFRS 15. Bong has applied the new standard using a retroactive method. In accordance with this option, no adjustment of opening balances was made as at 1 January 2018, as the accounting of revenue according to the new requirements already complies with the Group's previous accounting principles. The implementation of IFRS 15 had no significant impact on the Group, therefore, no reconciliation of opening balances has taken place.

Bong applies the five-step model according to IFRS 15 for all agreements with customers. In Bong's agreement with customers, product sales are judged to be a performance commitment. The basic principle is that income should reflect expected compensation in connection with the performance of a contractual commitment to the customer and correspond to the compensation to which the Group is entitled upon the transfer of control to the products delivered to the counterparty. Previously, Bong reported revenues when risk and benefits have been passed to the customer, now it is based on control. Revenue is reported when performance has been met, ie at the time the product has been passed on to the customer. Based on Bong's delivery model, the timing of when revenue is reported is not changed. In Bong there are variable remuneration to customers in the form of bonuses, these are allocated to performance commitments in the agreements, which are in accordance with previous accounting principles.

IFRS 16 Leases

In January 2016, IASB issued a new lease standard that will replace IAS 17 Leases and the related interpretations IFRIC 4, SIC-15 and SIC-27. The standard requires assets and liabilities arising from all leases, with some exceptions, to be recognized on the balance sheet. The accounting for lessors will in all material aspects be unchanged. The standard is effective for annual periods beginning on or after 1 January 2019. The Group is currently conducting a mapping and analysis of the Group's leasing contract in order to quantify the effects of the implementation of IFRS 16 in the financial reports.

No other IFRS standards or IFRIC interpretations which have not yet come into force are expected to have a material impact on the Group.

Change in corporate tax rate

On 14 June, the Swedish govornment has decided on new tax rules that

will begin to apply from January 1, 2019. The decision includes a change in the corporate tax rate and it will be reduced in two steps. In the first step, a decrease is from 22% to 21.4% from January 1, 2019 and in the second step, a further reduction to 20.6% from January 1, 2021. The company's deferred tax assets and deferred tax liabilities should be valued according to the tax rate applicable for the period during which the underlying temporary difference is reversed or when tax loss carryforwards or tax deductions will be utilized. This means that, as of 30 June, the company analyzed and assessed the rates at which the temporary differences should be reversed or utilized. The effect of this amount was SEK -1 million.

Kristianstad 12 July 2018

Christian Paulsson	Stéphane Hamelin
Chairman of the Board	Member of the Board
Mikael Ekdahl	Eric Joan
Member of the Board	Member of the Board
Stefan Lager	Helena Persson
Member of the Board	Member of the Board

Christer Muth Håkan Gunnarsson Member of the Board Chief Executive Officer & Member of the Board

This report has not been subject to examination by the company´s auditors.

Håkan Gunnarsson Chief Executive Officer

Additional information

Håkan Gunnarsson, CEO for Bong AB. Tel +46 44-20 70 00 (switchboard)

Financial Calendar:

• Interim Report January–September, 2018, 15 November 2018
• Year End Report 2018, 14 February 2019
• Interim Report January–March, 2019, May 2019
• Interim Report January–June, 2019, July 2019
• Interim Report January–September, 2019, November 2019

Income statement in summary

		Apr–Jun	Apr–Jun	Jan–Jun	Jan–Jun	Jul 2017-	Jan–Dec
		2018	2017	2018	2017	Jun 2018	2017
MSEK	Note	3 month	3 month	6 month	6 month	12 month	12 month
Revenue	1	543.0	480.7	1,081.2	1,025.9	2,150.5	2,095.3
Cost of goods sold		-459.0	-388.3	-904.0	-833.8	-1,784.5	-1,714.2
Gross profit		84.0	92.4	177.1	192.2	366.0	381.1
Selling expenses		-47.2	-43.0	-94.6	-88.3	-187.7	-181.5
Administrative expenses		-36.2	-40.0	-74.1	-74.8	-145.7	-146.4
Other operating income and expenses		9.2	-1.9	13.3	-3.0	8.3	-8.0
Operating profit		9.8	7.4	21.8	26.1	40.9	45.2
Net financial items		-12.1	-11.6	-23.0	-23.1	-43.9	-44.1
Non-recurring items, finance net		-10.5	-	-10.5	-	-10.5	-
Result before tax		-12.8	-4.2	-11.7	3.0	-13.5	1.1
Income tax		-4.2	-4.2	-9.3	-7.6	-11.6	-9.9
Net result		-17.0	-8.3	-21.0	-4.6	-25.1	-8.8
Total comprehensive income attributable to:
Share holders in Parent Company		-17.0	-9.3	-22.4	-6.2	-28.6	-12.4
Non-controlling interests		0.0	0.9	1.4	1.6	3.5	3.6
Basic earnings per share		-0.08	-0.04	-0.11	-0.03	-0.14	-0.06
Diluted earnings per share		-0.08	-0.04	-	-0.03	-0.14	-0.06
Basic earnings per share, excluding non recurring items		-0.03	-	-0.06	-	-0.09	-
Diluted earnings per share, excluding non recurring items		-0.03	-	-	-	-0.09	-
Average number of shares. basic		211,205,058	211,205,058	211,205,058	211,205,058	211,205,058	211,205,058
Average number of shares. diluted		251,205,058	251,205,058	251,205,058	251,205,058	251,205,058	251,205,058
STATEMENT OF COMPREHENSIVE INCOME		Apr–Jun	Apr–Jun	Jan–Jun	Jan–Jun	Jul 2017-	Jan–Dec
MSEK		2018	2017	2018	2017	Jun 2018	2017
Net result for the year		-17.0	-8.3	-21.0	-4.6	-25.1	-8.8
Other comprehensive income
Items that will not be reclassified to profit or loss:
Actuarial loss on post employment benefit obligations		-4.6	-1.1	-6.2	-1.1	-5.0	0.0
		-4.6	-1.1	-6.2	-1.1	-5.0	0.0
Items that may be reclassified subsequently to profit or loss:
Cash flow hedges	2	0.0	0.0	0.0	0.0	0.4	0.2
Hedging of net investments		-4.4	-1.7	-18.5	-0.7	-26.3	-8.4
Exchange rate differences		13.8	2.4	59.6	3.8	98.9	20.0
Income tax relating to components of other comprehensive income		1.3	0.8	4.4	0.5	5.3	1.5
		10.7	1.5	45.4	3.7	78.3	13.3
Other comprehensive income for the period. net of tax		6.1	0.3	39.2	2.6	73.3	13.3
Total comprehensive income		-10.9	-8.0	18.2	-2.1	48.1	4.5
Total comprehensive income attributable to:			-7.8	16.8	-2.6		0.9
Share holders in Parent Company		-10.9	-0.2	1.4	0.5	44.6	3.6
Non-controlling interests		0.0				3.5

Balance sheet in summary

		30 Jun	30 Jun	31 Dec
MSEK	Note	2018	2017	2017
Assets
Intangible assets	3	626.5	599.9	603.3
Tangible assets		190.0	214.5	208.8
Financial assets	4	149.5	145.4	146.1
Inventories		217.6	201.7	189.3
Current receivables	5	414.1	326.7	354.6
Cash and cash equivalents	6	86.2	92.2	124.1
Total assets		1,683.9	1,580.5	1,626.2
Equity and liabilities
Equity		712.8	693.1	696.2
Non-current liabilities	7	453.8	429.9	437.3
Current liabilities	8	517.3	457.5	492.7
Total equity and liabilities		1,683.9	1,580.5	1,626.2

CHANGES IN EQUITY

		Jan-Jun	Jan-Jun	Jan-Dec
MSEK	Note	2018	2017	2017
Opening balance for the period		696.2	697.3	697.3
Bond loan / Convertible loan		-1.7	-1.7	-3.3
Dividend to owner without significant influence		-	-0.8	-2.9
Non-controlling interests		-	0.4	0.6
Total comprehensive income		18.2	-2.1	4.5
Closing balance for the period		712.8	693.1	696.2

Cash flow statement

		Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jul 2017- Jun 2018	Jan-Dec 2017
MSEK	Note	3 month	3 month	6 month	6 month	12 month	12 month
Operating activities
Operating profit/loss		9.8	7.4	21.8	26.1	40.9	45.2
Depreciation, amortisation, and impairment losses		10.8	11.1	22.1	22.9	45.3	46.2
Interest received		0.0	0.0	0.1	0.1	0.1	0.2
Interest paid		-0.3	-5.8	-0.6	-11.4	-2.1	-12.9
Financial expenses		0.0				1.3	1.3
Financial income		-2.2	-1.2	-3.3	-2.5	-5.6	-4.8
Tax paid		-5.8	-4.7	-8.1	-11.7	-15.0	-18.6
Other items not affecting liquidity	9	-28.8	-6.8	-37.8	-18.3	-38.7	-19.1
Cash flow from operating activities before changes in
working capital		-16.5	0.1	-5.8	5.2	26.3	37.3
Changes in working capital
Inventories		-7.7	-16.6	-26.5	-14.8	-11.1	0.6
Current receivables		-23.9	9.7	-28.3	19.3	-45.5	2.1
Current operating liabilities		-0.8	-7.0	10.4	-0.6	20.9	9.9
Cash flow from operating activities		-49.0	-13.8	-50.2	9.0	-9.3	49.9
Cash flow from investing activities
Aquisition of intangible and tangible assets incl.
advanced payments to suppliers		-6.5	-2.9	-8.4	-4.0	-19.7	-15.3
Disposal of intangible and tangible assets		6.9	1.5	12.4	1.5	16.1	5.3
Cash flow from investing activities		0.4	-1.4	3.9	-2.5	-3.6	-10.0
Cash flow after investing activities		-48.5	-15.2	-46.3	6.5	-12.9	39.9
Cash flow from financing activities
Change in credit facilities		3.7	-0.5	5.0	-3.0	5.0	-3.0
Change in other long-term debt		-0.1	-0.2	-0.3	-0.5	-1.1	-1.4
Dividend to non-controlling interest		-	-	-	-0.8	-2.2	-2.9
Cash flow from financing activities		3.6	-0.7	4.8	-4.2	1.7	-7.3
Cash flow for the period		-44.9	-15.9	-41.5	2.2	-11.2	32.6
Cash and cash equivalents at beginning of period		127.5	108.3	124.1	89.9	92.2	89.9
Exchange rate difference in cash and cash equivalents		3.7	-0.2	3.7	0.1	5.2	1.6
Cash and cash equivalents at end of period		86.2	92.2	86.2	92.2	86.2	124.1

Notes (MSEK)

Note 1 - Segment Information

		Apr-Jun 2018		Apr-Jun 2017		Jan-Jun 2018		Jan-Jun 2017		Jul 2017-Jun 2018		Jan-Dec 2017
Net sales	Envelope	Light Packaging	Envelope	Light packaging	Envelope	Light packaging	Envelope	Light packaging	Envelope	Light packaging	Envelope	Light packaging
Sweden	75	22	58	21	75	22	58	21	131	44	114	43
Nordic and Baltics	99	20	95	19	99	19	95	19	185	41	181	41
Central Europe	289	68	272	60	289	68	272	60	575	147	558	139
France and Spain	203	41	203	42	203	41	203	42	405	96	404	97
UK	161	36	152	31	161	36	152	31	307	70	298	65
Russia/East Europe	18	3	31	4	18	3	31	5	52	8	65	10
Other	34	12	28	9	34	12	28	9	65	22	60	19
Total	879	202	839	186	879	202	839	186	1,721	430	1,681	415

Note 1 - Segment Information, cont'd

Assets	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017
Sweden	169	179	176
Nordic and Baltics	120	114	114
Central Europe	210	202	205
France and Spain	231	220	219
UK	86	81	81
Russia/East Europe	-	18	17
Other	-	-	-
Total	816	814	812

Note 2 - Financial assets and liabilities

The table below shows the Group's financial assets and liabilities in the form of derivatives measured at fair value. All financial derivatives measured at fair value are in Category 2. These include interest rate swaps and foreign exchange contracts and the valuation is based on the forward interest rates derived from observable yield curves.

2018-06-30	Assets	Liabilities
Interest rate swaps - cash flow hedges	0.0	0.0
Currency forwards - cash flow hedges	0.0	0.0
Currency forwards - held for trading	0.0	0.0
Total	0.0	0.0
2017-06-30	Assets	Liabilities
Interest rate swaps - cash flow hedges	0.0	0.0
Currency forwards - cash flow hedges	0.0	0.0
Currency forwards - held for trading	0.0	0.6
Total	0.0	0.6
2017-12-31	Assets	Liabilities
Interest rate swaps - cash flow hedges	0.0	0.0
Currency forwards - cash flow hedges	0.0	0.0
Currency forwards - held for trading	0.0	0.0
Total	0.0	0.0

* For the above contracts. the following amounts are found in the hedge reserve under Total comprehensive income; interest rate swaps - cash flow hedges SEK 0 million. currency forwards - cash flow hedges SEK 0 million.

Other financial assets and liabilities

• Fair value of the following financial assets and liabilities is estimated to be equal to
• book value:
• Trade receivables and other receivables
• Other current receivables
• Cash and cash equivalents
• Long-term and short-term loans
• Trade payables and other liabilities
• Other financial assets and liabilities

Information about netting of financial assets and liabilities

The Group does not apply net recognition for any of its other significant assets and liabilities and has no netting agreements with financial counterparties.

	Jan-Jun	Jan-Jun	Jan-Dec
Note 3 - Intangible assets	2018	2017	2017
Goodwill	604.4	565.5	574.6
Other intangible assets	22.1	34.4	28.7
Total	626.5	599.9	603.3

	Jan-Jun	Jan-Jun	Jan-Dec
Note 4 - Financial assets	2018	2017	2017
Deferred tax	146.9	143.3	143.9
Other financial assets	2.6	2.1	2.2
Total	149.5	145.4	146.1
	Jan-Jun	Jan-Jun	Jan-Dec
Note 5 - Current assets	2018	2017	2017
Receivables	293.5	253.3	282.1
Other current assets	120.6	73.4	72.5
Total	414.1	326.7	354.6

	Jan-Jun	Jan-Jun	Jan-Dec
Note 6 - Cash and cash equivalent	2018	2017	2017
Cash/Bank	84.8	72.9	102.8
Cash/Bank escrow account	1.4	19.3	21.3
Total	86.2	92.2	124.1
	Jan-Jun	Jan-Jun	Jan-Dec
Note 7 - Non-current liabilities	2018	2017	2017
Interest-bearing loans	192.4	177.4	184.3
Pension debt	222.1	210.4	212.1
Deferred tax	23.2	24.4	21.9
Other liabilities	16.1	17.6	18.9
Total	453.8	429.9	437.3

In connection with the issuance 2016 of the bonds, the bondholders also were awarded shares and options without consideration with a total fair value of SEK 37.3 million. This is considered to be a bundled transaction in which the proceeds from the bond issue will be allocated on the relative fair value of the respective financial instrument that the bondholder received. Thus, a total of about SEK 37.3 million of the total proceeds was allocated to shares and options, which are recognized in equity and a correspoding amount is reduced the value of the loan. The difference, compared to the principal amount of the loan at the time of issue is accrued as an additional financial expense debit the income statement respectively the equity.

	Jan-Jun	Jan-Jun	Jan-Dec
Note 8 - Current liabilities	2018	2017	2017
Interest-bearing loans	5.2	-	-
Payables	248.5	194.0	240.4
Other liabilities	263.6	263.5	252.3
Total	517.3	457.5	492.7

Note 9 - Financial- and other non-cash items

Adjustment of the cash flow statement has been made to clarify paid financial transactions.

QUARTERLY DATA. GROUP

MSEK	2/2018	1/2018	4/2017	3/2017	2/2017	1/2017	4/2016	3/2016	2/2016	1/2016	4/2015	3/2015	2/2015	1/2015	4/2014	3/2014
Net Revenue	543.0	538.1	578.0	491.4	480.7	545.2	579.0	489.0	499.8	566.7	612.8	560.2	532.7	639.3	676.7	600.6
Operating expenses	-533.2	-526.1	-560.9	-489.4	-473.3	-526.5	-564.2	-498.9	-507.3	-555.3	-612.3	-557.4	-539.0	-641.5	-729.8	-610.0
Operating profit	9.8	12.0	17.1	2.0	7.4	18.6	14.8	-9.9	-7.5	11.4	0.6	2.9	-6.2	-2.2	-53.1	-9.4
Net financial items	-22.6	-10.9	-10.7	-10.3	-11.6	-11.5	-14.6	-12.1	-10.2	421.0	-15.8	-12.1	-13.5	-13.6	-13.4	-13.3
Profit before tax	-12.8	1.1	6.4	-8.2	-4.2	7.2	0.2	-22.0	-17.7	432.4	-15.3	-9.2	-19.7	-15.8	-66.5	-22.6

KEY RATIOS	Jan-Jun	Jan-Jun	Jul 2017-	Jan-Dec
	2018	2017	Jun 2018	2017
Operating margin, %	2.0	2.5	1.9	2.2
Return on equity, %*	-	-	neg	neg
Return on capital employed, %* 1 )	-	-	3.99	4.30
Equity/assets ratio, %*	42.3	43.9	42.3	42.8
Net debt/equity ratio times*	0.47	0.45	0.47	0.42
Net loan debt/EBITDA*	-	-	3.88	3.21
Capital employed, SEK M*	1,132.5	1,079.3	1,132.5	1,092.7
Interest-bearing net loan debt, SEK M*	334.8	314.9	334.8	293.7
1) Return on capital employed
Earnings after financial revenues			30.7	46.9
Average capital employed			1,106.7	1,091.3

For the key figures above, are those marked * considered to be APM (Alternative Performance Measures) and not follow IFRS. They are judged however by management to be important to show shareholders the Group's underlying performance, profitability and financial position. It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies. For definitions see page 11.

DATA PER SHARE	Jan-Jun 2018	Jan-Jun 2017	Jul 2017- Jun 2018	Jan-Dec 2017
Basic earnings per share, SEK	-0.11	-0.03	-0.14	-0.06
Diluted earnings per share, SEK 2 )	-0.11	-0.03	-0.14	-0.06
Basic earnings per share, excluding non
recurring items, SEK	-0.06	-	-0.09	-
Diluted earnings per share, excluding
non recurring items, SEK	-0.06	-	-0.09	-
Basic equity per share, SEK	3.37	3.28	3.37	3.30
Diluted equity per share, SEK	2.84	3.28	2.84	2.77
Basic number of shares outstanding at
end of period	211,205,058	211,205,058	211,205,058	211,205,058
Diluted number of shares outstanding
at end of period	251,205,058	251,205,058	251,205,058	251,205,058
Average number of shares basic	211,205,058	211,205,058	211,205,058	211,205,058
Average number of shares diluted	251,205,058	251,205,058	251,205,058	251,205,058

2) The number of options amounts to maximum 40,000,000. Each option gives the right to subscribe for one share in Bong. All options were used before 29 February 2016. Subscription for shares based on the options shall take place by 1 February 2019. Upon subscription, the price per share is 1.15 SEK. Bongs average share price during the year is below 1.15 SEK which is why no dilution effect is taken into consideration.

Five-year summary

Key ratios	2017	2016	2015	2014	2013
Net sales. MSEK	2,095	2,135	2,345	2,533	2,564
Operating profit/loss. MSEK	45	9	-5	-123	-109
Extraordinary items. financial net. MSEK	-	430
Profit/loss after tax. MSEK	-9	297	-64	-150	-141
Cash flow after investing activities. MSEK	40	30	-75	94	-91
Operating margin. %	2.2	0.4	-0.2	-4.8	-4.3
Capital turnover rate. times	1.3	1.2	1.2	1.3	1.2
Return on equity. %	neg	neg	neg	neg	neg
Average capital employed. MSEK	1,091	1,188	1,343	1,375	1,586
Return on capital employed. %	0.2	neg	neg	neg	neg
Equity ratio. %	43	43	16	19	26
Net loan debt. MSEK	294	315	837	790	802
Net loan debt/equity. times	0.42	0.45	2.64	2.09	1.54
Net debt/EBITDA. times	3.2	5.2	11.9	neg	neg
Average number of employees	1,462	1,556	1,763	1,873	2,051
Number of shares
Basic number of shares outstanding at end of period	211,205,058	211,205,058	156,659,604	156,659,604	156,659,604
Diluted number of shares outstanding at end of period	251,205,058	251,205,058	183,932,331	183,932,331	183,932,331
Average basic number of shares	211,205,058	207,417,179	156,659,604	156,659,604	63,873,865
Average diluted number of shares	251,205,058	246,533,341	183,932,331	183,932,331	73,796,014
Earnings per share
Before dilution. SEK	-0.06	1.42	-0.41	-0.96	-2.20
After dilution. SEK	-0.06	1.42	-0.41	-0.96	-2.20
Earnings per share. before dilution. excluding non-recurring items	-	-0.64	-.	-	-
Earnings per share. after dilution. excluding non-recurring items	-	-0.64	-	-	-
Equity per share
Before dilution. SEK	3.30	3.30	2.02	2.41	3.33
After dilution. SEK	3.30	3.30	1.95	2.27	3.06
Cash flow from operating activities per share
Before dilution. SEK	0.25	0.26	-0.95	0.62	-0.40
After dilution. SEK	0.25	0.26	-0.81	0.53	-0.34
Other data per share
Dividend. SEK 1)
	0.00	0.00	0.00	0.00	0.00
Quoted market price on the balance sheet date. SEK	0.95	0.9	1.3	1.1	1.5
P/E-ratio. times	neg	0.61	neg	neg	neg
Adjusted P/E-ratio. times	-	neg	-	-	-
Price/Equity before dilution. %	29	27	62	46	45
Price/Equity after dilution. %	29	27	65	49	49

1) Proposal by the board For definitions see page 11

Definitions

This Report includes both financial ratios based on concepts defined in IFRS, APMs (Alternative Performance Measures) according to ESMA's definition and other company-specific ratios. The ratios are defined below.

For historical values: http://www.bong.com/en/investors/reports/historical-values

ADJUSTED EARNINGS PER SHARE BEFORE AND AFTER DILUTION

Profit after tax, excluding extraordinary net financial item divided by average number of shares before and after dilution.

AVERAGE CAPITAL EMPLOYED

Capital employed at beginning of year plus capital employed at year-end divided by two.

AVERAGE EQUITY

Shareholders' equity at beginning of year plus equity at year-end divided by two.

ADJUSTED P/E RATIO, TIMES

Share price divided by adjusted earnings per share.

AVERAGE TOTAL ASSETS

Total assets at beginning of year plus total assets at year-end divided by two.

CAPITAL TURNOVER, TIMES

Net sales by average total assets. Capital Asset turnover is a measure of how effectively the Group uses its assets.

EARNINGS PER SHARE BEFORE AND AFTER DILUTION

Profit after tax divided by the average number of shares before and after dilution.

EQUITY TO ASSETS RATIO, PER CENT

Shareholders' equity divided by total assets. Equity to assets ratio is a measure of the Group's financial strength.

EBITDA

Operating income before depreciation and amortization.

ESMA

The European Securities and Markets Authority. ESMA is the Euro¬pean Union's body for monitoring the financial markets.

EXTRAORDINARY NET FINANCIAL ITEM

Net total gain from the refinancing transactions in 2016.

IFRS

International Financial Reporting Standards. An International accounting standard that Bong applies.

NET DEBT

Interest-bearing liabilities and provisions less liquid funds and interestbearing receivables.

NET DEBT/EBITDA, TIMES

Net debt divided by EBITDA. Net debt/EBITDA is a measure of the Group's financial strength.

NET DEBT TO EQUITY, TIMES

Net debt divided by equity. Net debt to equity is a measure of the Group's financial strength.

OPERATING MARGIN, PER CENT

Operating profit divided by net sales. Operating margin is a measure of profitability. It measures how much of revenues remains after operating expenses.

P/E RATIO, TIMES

Share price divided by earnings per share.

RETURN ON CAPITAL EMPLOYED, PER CENT

Earnings after financial income divided by average capital employed. For 2016 the extraordinary net financial item has been excluded. This measure shows the return of the Group's total balance sheet, excluding non-interestbearing debt. It is a profitability measure independent of the Group's indebtedness. It complements the measure return on equity.

RETURN ON EQUITY, PER CENT

Earnings after tax divided by average equity. For 2016 the extraordinary net financial item has been excluded. This measure measures the return on shareholders' funds for the year and is useful in comparisons of other investments with the same risk profile.

SHARE PRICE/EQUITY, PER CENT

Price per share divided by equity per share.

Parent company

INCOME STATEMENT IN SUMMARY	Jan–Jun	Jan–Jun
MSEK	2018	2017
Revenue	1.7	1.7
Gross profit	1.7	1.7
Administrative expenses	-9.2	-8.2
Operating profit/loss	-7.5	-6.5
Non-recurring items finance net	-	-
Net financial items	-3.7	-4.4
Result	-11.2	-10.9
Income tax	-0.3	-
Net result	-11.5	-10.9

STATEMENT OF COMPREHENSIVE INCOME	Jan–Jun	Jan–Jun
MSEK	2018	2017
Net Result for the year	-11.5	-10.9
Other comprehensive income
Net financial items reported directly in consolidated equity:
Cash flow hedges	-	-
Income tax relating to components of other comprehensive income	-	-
Net result, Other comprehensive income	-	-

Total comprehensive income -11.5 -10.9

BALANCE SHEET IN SUMMARY	30 Jun	31 Dec
MSEK	2018	2017
Assets
Financial assets	1 036.5	1 036.5
Current receivables	3.1	0.7
Cash and cash equivalents	11.7	31.5
Total Assets	1 051.3	1 068.7
Equity and liabilities
Equity	648.9	662.4
Non-current liabilities	194.1	184.4
Current liabilities	208.3	221.9
Total equity and liabilities	1 051.3	1 068.7

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