TOMRA Systems — Interim / Quarterly Report 2017

Jul 19, 2017

19.07.2017

2 nd Quarter & 1 st Half 2017

HIGHLIGHTS

2Q 2017

• Order intake of 752 MNOK in TOMRA Sorting (ex Compac), up from 667 MNOK same period last year (up 16% currency adjusted)
• Order backlog of 873 MNOK in TOMRA Sorting (ex Compac), up from 816 MNOK at the end of second quarter 2016
• Revenues of 1,972 MNOK (1,769 MNOK in second quarter 2016), up 11%. Adjusted for currency and acquisitions, revenues were:
• Down 4% for TOMRA Group
• Down 12% in TOMRA Collection
• Up 8% in TOMRA Sorting
• Gross margin 42%, down from 43% in second quarter 2016
• Slightly reduced margins due to consolidation of Compac
• Operating expenses of 528 MNOK
• Unchanged compared to same period last year after adjusting for currency and acquisitions
• EBITA of 306 MNOK (319 MNOK in second quarter 2016)
• Cash flow from operations of 170 MNOK (239 MNOK in second quarter 2016)

1H 2017

• Revenues of 3,536 MNOK (3,129 MNOK in first half 2016), up 13%. Adjusted for currency and acquisitions, revenues were:
• Unchanged for TOMRA Group
• Down 5% in TOMRA Collection
• Up 8% in TOMRA Sorting
• Gross margin 41%, down from 43% in first half 2016
• Slightly reduced margins due to consolidation of Compac
• EBITA of 464 MNOK (472 MNOK in first half 2016)
• Cash flow from operations of 292 MNOK (357 MNOK in first half 2016)
• Dividend of NOK 2.10 per share paid out in May 2017, up from NOK 1.75 per share in 2016
• Strong performance in TOMRA Sorting
• Good momentum in Food
• Improved momentum in Recycling
• Acquisition of Compac completed

CONSOLIDATED FINANCIALS

Second quarter

Revenues in the second quarter 2017 amounted to 1,972 MNOK compared to 1,769 MNOK in second quarter last year, up 11%. Organic, currency adjusted revenues were down 12% in TOMRA Collection Solutions and up 8% in TOMRA Sorting Solutions.

Gross margin was 42% in the quarter, down from 43% in the same period last year, due to the Compac acquisition.

Operating expenses of 528 MNOK in second quarter, unchanged compared to same period last year after adjusting for currency and acquisitions.

EBITA was 306 MNOK in second quarter 2016 versus 319 MNOK in the second quarter 2017.

Net finance was positive by 9 MNOK in the quarter, positively influenced by currency gains of 12 MNOK.

Cash flow from operations in second quarter 2017 equaled 170 MNOK, down from 239 MNOK in second quarter 2016.

First half

Revenues in first half 2017 amounted to 3,536 MNOK compared to 3,129 MNOK in first half last year, up 13%. Organic, currency adjusted revenues were down 5% in TOMRA Collection Solutions and up 8% in TOMRA Sorting Solutions.

Gross margin was 41% in first half 2017, down from 43% in the same period last year, due to the Compac acquisition.

Operating expenses of 1,003 MNOK in first half 2017, up 2% adjusted for currency and acquisitions.

TOMRA Group
(MNOK)	2Q17	2Q16	YTD17	YTD16
Revenues	1 972	1 769	3 536	3 129
Gross contribution	834	758	1 467	1332
- in %	42 %	43 %	41 %	43 %
Operating expenses	528	439	1003	860
EBITA	306	319	464	472
- in %	16 %	18 %	13 %	15 %
Incl. onetime costs
- In operating exp.	4	-	8	-

EBITA was 464 MNOK in first half 2017 versus 472 MNOK in first half 2016.

Cash flow from operations in first half 2017 equaled 292 MNOK, compared to 357 MNOK in same period last year.

The equity ratio decreased from 59% at year end 2016 to 52% at the end of June 2017 and net interest bearing debt increased by 621 MNOK during the same period, due to the acquisition of Compac in February 2017 and dividend of 310 MNOK paid out in May 2017. At the end of second quarter 2017 NIBD/EBITDA on a rolling 12 month basis was equal to 0.7x.

BUSINESS AREA REPORTING

TOMRA Collection Solutions Second quarter

Revenues in the business area equaled 975 MNOK in the second quarter, down from 1,089 MNOK in second quarter last year. After adjustment for currency changes, revenues were down 12%.

Gross margin was 42%, unchanged from last year. Operating expenses were 220 MNOK, down 2% currency adjusted.

EBITA was MNOK 191, down from 237 MNOK, a result of lower revenues.

First half

Revenues in the business area equaled 1,852 MNOK in first half 2017, down from 1,958 MNOK in first half last year. After adjustment for currency changes, revenues were down 5%.

Gross margin was 41%, unchanged from last year. Operating expenses were up 1% currency adjusted.

EBITA was 335 MNOK, down from 384 MNOK, due to lower revenues.

Europe

Currency adjusted revenues in Europe were down 17% in second quarter, compared to second quarter 2016. This was mainly due to lower activity in Nordic, as the replacement driven by new regulations in Sweden (effective 1 January 2017) was completed during first quarter 2017.

There is still good momentum in Germany due to replacement demand, but somewhat lower than the strong second quarter in 2016.

North America

Currency adjusted revenues were unchanged in second quarter compared to same period last year. Both machine sales as well as throughput-volumes were stable.

Rest of the world

TOMRA has submitted a tender for a Network Operator role in the New South Wales deposit scheme jointly with Cleanaway, the leading waste management company in Australia.

TOMRA Collection Solutions
(MNOK)	2Q17	2Q16	YTD17	YTD16
Revenues
- Nordic	149	186	288	344
- Europe (ex Nordic)	411	488	794	862
- North America	404	390	746	712
- Rest of World	11	25	24	40
Total revenues	975	1 089	1 852	1 958
Gross contribution	411	455	762	807
- in %	42 %	42 %	41 %	41 %
Operating expenses	220	218	427	423
EBITA	191	237	335	384
- in %	20 %	22 %	18 %	20 %

A response from the New South Wales Environment Protection Authority (EPA) to preferred tendering parties is expected during July 2017. The scheme commencement date is 1 December 2017.

Excluding one time cost

BUSINESS AREA REPORTING

TOMRA Sorting Solutions

Second quarter

Revenues equaled 997 MNOK in second quarter 2017, up 8% in local currencies, adjusted for acquisitions (Compac). Gross margin was 42%, down from same period last year due to Compac.

Operating expenses were unchanged (organic, currency adjusted)

EBITA increased from 92 MNOK in second quarter 2016 to 131 MNOK in second quarter 2017, driven by higher volumes and positive contribution from Compac.

The overall momentum in TOMRA Sorting has been satisfactory in second quarter 2017, with all business streams reporting improved performance compared to same period last year.

With both all time high order intake and all time high revenues, the quarter ended with a healthy order backlog of 1,093 MNOK, of which 220 MNOK was provided by Compac.

TOMRA Sorting Solutions
(MNOK)	2Q17	2Q16	YTD17	YTD16
Revenues
- Europe	329	303	536	508
- North America	434	247	686	404
- South America	33	13	58	17
- Asia	92	67	200	157
- Oceania	82	34	139	55
- Africa	27	16	65	30
Total revenues	997	680	1 684	1 171
Gross contribution	423	303	705	525
- in %	42 %	45 %	42 %	45 %
Operating expenses	292	211	544	417
EBITA	131	92	161	108
- in %	13 %	14 %	10 %	9 %

First half

Revenues equaled 1,684 MNOK in first half 2017, up 8% in local currencies, adjusted for acquisitions (Compac). Gross margin was 42%, down from same period last year due to Compac.

Operating expenses were up 1% (organic, currency adjusted)

EBITA increased from 108 MNOK in first half 2016 to 161 MNOK in first half 2017, driven by higher volumes and positive contribution from Compac.

Business streams

Food

Revenues in the Food business stream were up in second quarter 2017 compared to second quarter 2016. The order intake was also up in the same period.

Recycling

After a period of somewhat lower activity in the Recycling segment, activity has increased and both revenues and order intake improved in second quarter 2017 compared to second quarter 2016.

Mining

The market is still depressed in most commodities, but the performance overall was stable at a low level.

Order intake TOMRA Sorting

Order backlog TOMRA Sorting

Revenues TOMRA Sorting

COMPAC ACQUISITION

TOMRA signed 11 October 2016 a sales and purchase agreement with the owners of Compac Holding Ltd (Compac), acquiring 100 per cent of the shares in the company.

Closing of the transaction took place 31 January 2017, after TOMRA obtained approval from the New Zealand Overseas Investment Office.

Compac is a leading provider of lane sorting within the fresh fruit and vegetable segment. The company designs, manufactures, sells and services packhouse automation systems that sort fresh produce based on weight, size, shape, color, surface blemishes and internal quality.

With the acquisition of Compac, TOMRA has reinforced its leading position within the Food segment and is the first player to offer its customers both lane and bulk sorting of fresh and processed foods.

TOMRA paid at closing a consideration of 70 MNZD, free of cash and interest-bearing debt. In addition to the initial purchase price, the sellers were entitled to an earn-out linked to the combined EBIT for the period July 2016 to June 2019. A financial completion statement was prepared and presented during second quarter 2017, which was subject to discussions between TOMRA and the vendors. In July 2017, the parties agreed a final settlement where the earn out was cancelled in exchange for certain upfront agreements regarding warranty clauses and working capital levels.

MARKET OUTLOOK

The long term demand for better resource productivity is a result of megatrends such as population increase, a growing middle class consumer base and greater urbanization. TOMRA, as a leader in sensor based solutions, is favorably positioned to capitalize on these trends.

TOMRA Collection Solutions

The replacement demand in Germany is assumed to continue during 2017, but the replacement in Sweden is now finished.

TOMRA Sorting Solutions

Currently good momentum in Food, and improved momentum in Recycling.

Currency

Reporting in NOK and with some NOK cost base, TOMRA will in general benefit from a weak NOK, measured particularly against EUR.

ANNUAL GENERAL ASSEMBLY

The annual general assembly took place 27 April in Asker. All agenda points were approved, including a dividend of NOK 2.10 per share., which was paid out in May 2016.

THE TOMRA SHARE

The total number of issued shares at the end of second quarter 2017 was 148,020,078 shares, including 256,340 treasury shares. The total number of shareholders decreased from 5,869 at the end of first quarter 2017 to 5,781 at the end of second quarter 2017. Norwegian residents held 26% of the shares at the end of second quarter 2017.

TOMRA's share price increased from NOK 94.00 to NOK 102.00 during second quarter 2017. The number of shares traded on the Oslo Stock Exchange in the period was 9 million, down from 11 million in the same period in 2016.

Asker, 18 July 2017

The Board of Directors TOMRA SYSTEMS ASA

Jan Svensson Stefan Ranstrand Chairman of the Board President & CEO

Condensed Consolidated interim financial statements

STATEMENT OF PROFIT AND LOSS		2nd Quarter		1st Half		Full year
(MNOK)	Note	2017	2016	2017	2016	2016
Operating revenues	(5)	1 972,0	1 769,9	3 535,7	3 129,4	6 609,9
Cost of goods sold		1 112,1	987,5	2 019,6	1 748,9	3 692,4
Depreciations/write-down		26,1	24,7	49,5	48,7	103,4
Gross contribution		833,8	757,7	1 466,6	1 331,8	2 814,1
Operating expenses		494,2	412,8	939,4	805,5	1 586,8
Depreciations/write-down		34,0	26,4	63,6	54,6	108,1
EBITA	(5)	305,6	318,5	463,6	471,7	1 119,2
Amortizations		37,6	33,4	71,7	65,2	131,5
EBIT	(5)	268,0	285,1	391,9	406,5	987,7
Net financial income		9,1	8,1	6,0	4,0	20,4
Profit before tax		277,1	293,2	397,9	410,5	1 008,1
Taxes		70,7	71,5	101,5	100,1	256,9
Profit from continuing operations		206,4	221,7	296,4	310,4	751,2
Discontinued operations		0,0	(2,9)	0,0	(5,0)	(12,9)
Net profit		206,4	218,8	296,4	305,4	738,3
Non-Controlling interest (Minority interest)		(15,9)	(14,2)	(21,1)	(21,0)	(47,2)
Earnings per share (EPS)		1,29	1,38	1,86	1,92	4,68
Earnings per share (EPS) continuing operations		1,29	1,38	1,86	1,96	4,76
STATEMENT OF OTHER COMPREHENSIVE INCOME		2nd Quarter		1st Half		Full year
(MNOK)		2017	2016	2017	2016	2016

2017	2016	2017	2016	2016
206,4	218,8	296,4	305,4	738,3
67,3	(14,9)	90,7	(152,3)	(175,4)
Other comprehensive income that will not be reclassified to profit or loss
				(2,9)
273,7		387,1	153,1	560,0
13,4		18,1	13,5	43,1
260,3		369,0	139,6	516,9
273,7		387,1	153,1	560,0
	#REF!		203,9 15,3 188,6 203,9

STATEMENTS OF FINANCIAL POSITION	30 June		31 Dec
(MNOK)	2017	2016	2016
ASSETS
Intangible non-current assets	3 364,4	2 809,7	2 749,9
Tangible non-current assets	839,1	792,9	800,7
Financial non-current assets	362,0	318,8	342,6
Inventory	1 219,6	1 275,3	1 126,9
Receivables	1 975,9	1 766,0	1 695,5
Cash and cash equivalents	499,1	392,5	399,2
TOTAL ASSETS	8 260,1	7 355,2	7 114,8
EQUITY & LIABILITIES
Equity	4 275,0	3 846,4	4 192,3
Non-controlling interest	197,0	185,8	177,7
Deferred taxes	203,5	246,8	97,5
Long-term interest bearing liabilities	1 480,4	1 251,8	759,7
Short-term interest bearing liabilities	-	-	-
Other liabilities	2 104,2	1 824,4	1 887,6
TOTAL EQUITY & LIABILITIES	8 260,1	7 355,2	7 114,8

STATEMENT OF CASHFLOWS			2nd Quarter		1st half
(MNOK)	Note	2017	2016	2017	2016	Full year 2016
Profit before income tax*		277,1	290,3	397,9	405,5	995,2
Changes in working capital		(106,9)	(63,8)	(71,5)	(37,8)	60,9
Other operating changes		(0,7)	12,8	(34,8)	(10,3)	39,1
Total cash flow from operations		169,5	239,3	291,6	357,4	1 095,2
Cashflow from (purchase)/sales of subsidiaries		(68,0)	0,0	(479,6)	0,0	2,7
Other cashflow from investments		(67,8)	(69,4)	(146,2)	(140,3)	(320,3)
Total cash flow from investments		(135,8)	(69,4)	(625,8)	(140,3)	(317,6)
Sales/repurchase of treasury shares	(3)	23,9	1,3	23,9	20,4	(10,8)
Dividend paid out	(2)	(309,9)	(258,8)	(309,9)	(258,8)	(258,8)
Other cashflow from financing		228,7	132,0	720,7	99,3	(396,5)
Total cash flow from financing		(57,3)	(125,5)	434,7	(139,1)	(666,1)
Total cash flow for period		(23,6)	44,4	100,5	78,0	111,5
Exchange rate effect on cash		(3,7)	2,7	(0,6)	1,6	(25,2)
Opening cash balance		526,4	345,4	399,2	312,9	312,9
Closing cash balance		499,1	392,5	499,1	392,5	399,2

Condensed Consolidated interim financial statements (continued)

* Including loss from discontinued operations

EQUITY	Paid in	Transl.	Actuarial	Retained	Total	Minority
(MNOK)	capital	reserve	Gain /	earnings	majority	interest
Balance per 31 December 2016	1 065,8	484,6	(40,4)	2 682,3	4 192,3	177,7
Net profit				275,3	275,3	21,1
Changes in translation difference		93,7			93,7	(3,0)
Remeasurement defined benefit liability					0,0
Dividend non-controlling interest				(0,3)	(0,3)	1,2
Purchase of treasury shares					0,0
Treasury shares sold to employees	0,2			23,7	23,9
Minority new consolidated companies					0,0
Dividend to shareholders				(309,9)	(309,9)
Balance per 30 June 2017	1 066,0	578,3	(40,4)	2 671,1	4 275,0	197,0

EQUITY	2nd Quarter 1st Half			Full year
(MNOK)	2017	2016	2017	2016	2016
Opening balance	4 301,0	3 914,5	4 192,3	3 945,1	3 945,1
Net profit	190,5	204,6	275,3	284,4	691,2
Translation difference	69,8	(15,2)	93,7	(144,7)	(171,4)
Remeasurement defined benefit liability	0,0	0,0	0,0	0,0	(2,9)
Dividend non-controlling interest	(0,3)	0,0	(0,3)	0,0	0,0
Dividend paid	(309,9)	(258,8)	(309,9)	(258,8)	(258,8)
Net purchase of own shares	23,9	1,3	23,9	20,4	(10,9)
Closing balance	4 275,0	3 846,4	4 275,0	3 846,4	4 192,3

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTE 1 Disclosure

This interim report has been prepared in accordance with IAS34, and in accordance with the principles used in the annual accounts for 2016. The quarterly reports do not however include all information required for a full annual financial statement of the Group and should be read in conjunction with the annual financial statement for 2016. The quarterly reports have not been audited. The quarterly reports require management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The significant judgments made by management in preparing these condensed consolidated interim financial statements in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ending 31 December 2016.

A number of new standards, amendments to standards and interpretations are not effective for the period ended 30 June 2017 and have not been applied in preparing these consolidated financial statements. Those that may be relevant to the Group are set out below. The Group does not plan to adopt these standards early. These will be adopted in the period that they become mandatory unless otherwise indicated:

IFRS 9 Financial Instruments IFRS 15 Revenue from Contracts with Customers IFRS 16 Leases Amendments to IAS 12 – Recognition of Deferred Tax Assets for Unrealised Losses Amendments to 7 – Disclosure Initiative

TOMRA is considering the effects of the future adoption of these standards.

IFRS 15 was issued in May 2014 with effective date 1. January 2018. The standard establishes a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers. Under IFRS 15 an entity recognizes revenue when a performance obligation is satisfied, i.e. when control over the goods or services underlying the particular performance obligation is transferred to the customer.

The evaluation of the impact for TOMRA Collection Solutions will be completed during 2017, but as the majority of revenues in TOMRA Collection Solutions stem from sale of goods and service with only one performance obligation, the implementation of IFRS 15 in TOMRA Collection Solutions is not anticipated to significantly impact the financial statements.

The evaluation of the impact for TOMRA Sorting Solutions will be completed during 2017. Whether the sale of a sorter and the following installation should be considered one or several performance obligations is currently being evaluated. Based upon the conclusion, revenue recognition might be taken at a somewhat later point according to the new standard.

IFRS 16 leases was issued in January 2016 with effective date 1. January 2019. IFRS 16 specifies how to recognize, measure and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value.

The evaluation of the impact for TOMRA has not been completed at this stage, but the implementation of the lease standard is anticipated to increase the balance sheet by 10-15 percent. The implementation will also have a negative impact on key figures using total assets as a variable like ROCE. The expenses will be presented as depreciations and interest expenses in the income statement, rather than operating lease expenses, and will have a positive effect on EBITDA.

TOMRA's current assessment of other new and revised standards does not indicate any material effects in the financial statements from the new requirements.

Revenue recognition: Revenues from sales and sales-type leases of the company's products are generally recognized at the time of installation. Revenues from service contracts and operating leases of the company's products are recognized over the duration of the related agreements. Other service revenues are recognized when services are provided.

Seasonality: The Material Recovery operations, and to some extent the US Reverse Vending operations, are influenced by seasonality. The seasonality mirrors the beverage consumption pattern in the US, which normally is higher during the summer (2Q and 3Q) than during the winter (1Q and 4Q).

Financial exposures: TOMRA is exposed to currency risk, as only ~4% of its income is nominated in NOK. A strengthening/ weakening of NOK toward other currencies of 10% would normally decrease/increase operating profit by 8-12%. An increase in NIBOR and EURIBOR of 1 percentage point, would increase financial expenses by ~NOK 5 million per year.

Segment reporting: TOMRA has divided its primary reporting format into two business areas: Collection Solutions and Sorting Solutions. In addition, the corporate overhead costs are reported in a separate column. The split is based upon the risk- and return profile of the Group's different activities; also taking into consideration TOMRA's internal reporting structure.

• Collection Solutions consists of the business streams Reverse Vending (development, production, sales and service of Reverse Vending Machines and related data management systems) + Material Recovery (pick-up, transportation and processing of empty beverage containers on behalf of beverage producers/fillers on the US East Coast and in Canada)
• Sorting Solutions consists of the business streams Food, Recycling and Mining, all providing advanced optical sorting systems. Compac (acquired February 2017) is reported as part of Sorting Solutions (Food)
• Group Functions consists of costs related to corporate functions at TOMRA's headquarters

Assets and liabilities are distributed to the different business streams, except for cash, interest-bearing debt and taxpositions, which are allocated to Group Functions. There are no material revenues from transactions with other business areas. There were no material related party transactions in 2017.

Alternative performance measures: Alternative performance measures used in this report are defined in the following way:

• EBITA is the calculated profit (loss) for the period before (i) income tax expenses, (ii) finance income and expenses and (iii) amortization.
• Net interest bearing debt is calculated as the difference between interest-bearing debts and cash and cash equivalents. Interest-bearing debts include loans from financial institutions (current and non-current loans) and cash and cash equivalents include short-term deposits, cash funds and bank accounts.
• Currency adjusted revenues is the change in revenues, after adjusting for estimated currency effect.
• Order backlog is defined as the value of orders received within TOMRA Sorting that have not yet been delivered (and consequently not yet been taken to P/L).

The divested Compaction business is classified as discontinued operations in the profit and loss statement.

NOTE 2 Dividend paid

Paid out May 2016:	1.75 NOK x 147.9 million shares = NOK 258.8 million
Paid out May 2017:	2.10 NOK x 147.6 million shares = NOK 309.9 million

NOTE 3 Purchase of treasury shares

Net purchase of own shares	# shares	Average price				Total (MNOK)
2016
Purchased in the marked	350 000	NOK	89,16	31,2
Sold to employees	(242 136)	NOK	84,25	(20,4)
Net purchased	107 864			10,8
2017
Purchased in the marked
Sold to employees	242 606	NOK	98,67	23,9
Net purchased	242 606			23,9

NOTE 4 Interim results

(MNOK)	2Q17	1Q17	4Q16	3Q16	2Q16
Operating revenues (MNOK)	1 972	1 564	1 766	1 715	1 769
EBITA (MNOK)	306	158	316	331	318
EBIT (MNOK)	268	124	287	294	285
Sales growth (year-on-year) (%)	11 %	15 %	-3 %	-2 %	20 %
Gross margin (%)	42 %	40 %	42 %	43 %	43 %
EBITA margin (%)	16 %	10 %	18 %	19 %	18 %
EPS (NOK)	1,29	0,57	1,26	1,50	1,38
EPS (NOK) fully diluted	1,29	0,57	1,26	1,50	1,38

NOTE 5 Operating segments

SEGMENT		Collection Solutions		Sorting Solutions		Group Functions		Group Total
(MNOK)	2Q17	2Q16	2Q17	2Q16	2Q17	2Q16	2Q17	2Q16
Revenues	975	1 089	997	680			1 972	1 769
Gross contribution	411	455	423	303			834	758
- in %	42 %	42 %	42 %	45 %			42 %	43 %
Operating expenses	220	218	292	211	1 6	1 0	528	439
EBITA	191	237	131	9 2	(16)	(10)	306	319
- in %	20 %	22 %	13 %	14 %			16 %	18 %
Amortization	1 4	1 1	2 4	2 2			3 8	3 3
EBIT	177	226	107	7 0	(16)	(10)	268	286
- in %	18 %	21 %	11 %	10 %			14 %	16 %

SEGMENT	Collection Solutions			Sorting Solutions		Group Functions		Group Total
(MNOK)	YTD17	YTD16	YTD17	YTD16	YTD17	YTD16	YTD17	YTD16
Revenues	1 852	1 958	1 684	1 171			3 536	3 129
Gross contribution	762	807	705	525			1 467	1 332
- in %	41 %	41 %	42 %	45 %			41 %	43 %
Operating expenses	427	423	544	417	3 2	2 0	1 003	860
EBITA	335	384	161	108	(32)	(20)	464	472
- in %	18 %	20 %	10 %	9 %			13 %	15 %
Amortization	2 6	2 2	4 6	4 3			7 2	6 5
EBIT	309	362	115	6 5	(32)	(20)	392	407
- in %	17 %	18 %	7 %	6 %			11 %	13 %
Assets	2 983	3 059	4 495	3 663	782	633	8 260	7 355
Liabilities	994	1 073	1 003	674	1 791	1 576	3 788	3 323

NOTE 6 Compac acquisition

On 11. October 2016, TOMRA Sorting AS (a wholly owned subsidiary of Tomra Systems ASA) signed an agreement with the owners of Compac Holding Ltd (Compac) for 100 per cent of the shares in the company. Closing of the transaction took place 31 January 2017, after obtaining approval from the New Zealand Overseas Investment Office. Based on this, and the controls definitions in IFRS 3 Business combinations and IFRS 10 Consolidated financial statements, TOMRA has determined that the acquisition date was 31 January 2017. Compac has consequently been consolidated into TOMRA Group accounts from 1 February 2017.

Compac, whose headquarters are in New Zealand provides integrated post-harvest solutions and services to the global fresh produce industry using the world's most advanced grading technology. Combining industry leading solutions with award-winning grading platforms like Spectrim, the company's mission is to enable its customers to improve returns, gain operational efficiencies, and ensure a safe food supply via smart, useable technologies. To achieve this, Compac operates centers of excellence, regional offices and manufacturing locations within the United States, Europe, South America, Asia, Africa and Australasia. The main purpose of the acquisition of Compac is for TOMRA to reinforce its leading position within the food segment. TOMRA will, therefore, be the first player to offer its customers both lane and bulk sorting of fresh and processed food.

TOMRA paid at closing a consideration of 70 MNZD, free of cash and interest-bearing debt. In addition to the initial purchase price, the sellers were entitled to an earn-out linked to the combined EBIT for the period July 2016 to June 2019. A financial completion statement has been prepared and presented during second quarter 2017, which again has been subject to discussions between TOMRA and the vendors. In July 2017, the parties made a final settlement where the earn out was cancelled in exchange for certain upfront agreements regarding warranty clauses and working capital levels.

Accounting year July-June (Figures in MNZD)	FY14	FY15	FY16	1H17*	2H17**
Profit and loss
Revenues	75	105	152	72	68
EBIT	7	(2)	(1)	(5)	4
Balance sheet
	June14	June15	June16	Dec16	Jun17
Intangible non-current assets	1	8	14	11	15
Tangible non-current assets	6	10	12	14	8
Inventory	17	17	24	23	9
Receivables	8	22	19	17	24
Cash	4	4	4	9	14
Total assets	36	61	73	74	70
Equity	5	5	4	(5)	20
Interest bearing debt	8	23	29	39	24
Other liabilities	23	23	38	40	26
Total debt and equity	36	61	73	74	70

* July-Dec 2016

** Feb-Jun 2017

FY15, FY16 and FY17 (are extracted from management accounts and adjusted for one-off income and expenses. The figures are not harmonized with TOMRA accounting principles. If Compac was consolidated from 1 January 2017, revenues in the TOMRA Group accounts would have increased by 9 MNZD and EBIT would have been reduced by 1 MNZD

The figures up until December 2016 include a Spanish subsidiary, which had revenues of ~12 MNZD in FY16 and ~8 MNZD in FY17 (6months). The subsidiary was divested at closing.

The company is in the process of harmonizing accounting principles and full disclosure under IFRS (including full purchase price allocation) is therefore not currently available. This work will be performed later during 2017.

The closing balance sheet includes the following preliminary assessments (Amounts in NZD million):

	Preliminary acquired	Preliminary
	carrying amount	fair value	Preliminary
	at acquisition date	adjustments	Fair value
Intangible non-current assets	11.7	66.5	78.2
Tangible non-current assets	9.1	0.0	9.1
Inventories	16.0	-1.7	14.3
Receivables	18.6	-0.8	17.8
Non-interest-bearing liabilities	-38.4	-2.1	-40.5
Total consideration satisfied by cash	17.0	61.9	78.9
Net cash outflow arising on acquisition:
Cash consideration paid			66.0
Interest bearing debt acquired			12.9
Net cash outflow			78.9

Preliminary purchase price allocation analysis indicates that intangibles mainly relate to Goodwill. The 1H17 figures include preliminary amortization of intangibles from purchase price allocations of 5 MNOK. 1H17 also includes acquisition cost of 8 MNOK, reported as operating expenses under Group Functions. Compac is reported under the segment "Sorting Solutions".

STATEMENT BY THE BOARD OF DIRECTORS AND THE CEO

We hereby confirm that the half-yearly financial statements for the Group for the period 1 January through 30 June 2017 to the best of our knowledge have been prepared in accordance with IAS 34 Interim Financial Reporting, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the company taken as a whole.

To the best of our knowledge, the half-yearly report gives a true and fair:

• Overview of important events that occurred during the accounting period and their impact on the half-yearly financial statements
• Description of the principal risks and uncertainties facing the Group over the next accounting period
• Description of major transactions with related parties.

Asker, 18 July 2017

Jan Svensson Aniela Gjøs Bodil Sonesson Pierre Couderc Linda Bell Chairman Board member Board member Board member Board member

David Williamson	Bente Traa	Stefan Ranstrand
Board member	Board member	President and CEO
Employee	Employee
Representative	representative

About TOMRA

TOMRA was founded on an innovation in 1972 that began with design, manufacturing and sale of reverse vending machines (RVMs) for automated collection of used beverage containers.

Today, TOMRA has ~90,000 installations in over 80 markets worldwide and had total revenues of ~6.6 billion NOK in 2016.

The Group employs ~3,500 globally, and is publicly listed on the Oslo Stock Exchange. (OSE: TOM)

The TOMRA Group continues to innovate and provide cutting-edge solutions for optimal resource productivity within two main business areas: Collection Solutions (reverse vending and material recovery) and Sorting Solutions (recycling, mining and food sorting).

For further information about TOMRA, please see www.TOMRA.com

NOMRA COLLECTION SOLUTIONS		TOMRA SORTING SOLUTIONS
0.0.0.0.0. 00000 $\triangle$ 00000000000 0.0000 0.0.0 00 00 00000 000 00000000000 000 0.0 0000000000 0.0 0.0.0 0.0.000000000000000000000000000000000 0.00000000000000000000000000000000000 8888888 $\begin{array}{cccc} & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 &$ *** 0000000 $0.00000000000000000000000000000000000$ 0.0.0.0.0 0.0 血杂血 $\begin{array}{cccc} 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 \ 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 \ 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 \ 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 \ \end{array}$ 00 $0000000000000000000$ ٠ $\circ$ 66 $000000000000000000000000000000000000$ * $0.00000000000000000000000000000000000$ 0000 $000000000$ $000000000000000000000000000000000000$ 000 $\overline{55}$ $\overline{6}$ $\overline{6}$ $\overline{6}$ $\bullet\bullet\bullet$ 00 ās. 000000000000 0 00 $\bullet\bullet\bullet$ 0000000 ÷ $\bullet \bullet$ 00 000000 0000000000000 ö $\qquad \qquad \circ$ $\ddot{\phantom{1}}$ 0000 ** 0.0000000000 0000000 000000 0.000 0.01 666666 000 $\bullet$ $\alpha$ BBBBBBBB 0.00000 0000000 66666 00000 00 0000000 $\alpha$ AAGGGGG 888888888 00000 $\begin{array}{c} 0 & 0 & 0 & 0 \ 0 & 0 & 0 & 0 \ 0 & 0 & 0 & 0 \ 0 & 0 & 0 & 0 \ 0 & 0 & 0 & 0 \end{array}$ 000 00000000 000 000 $\ddot{\phantom{1}}$ 0.0 $\ddot{\ddot{\bf s}}$ ÷ 00 $\overline{00}$ $\overline{0}$		00000000 $\begin{array}{cccc} 0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&$ 00000000 0000000 $\begin{array}{cccc} 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & 0 & $ **** $\frac{1}{2}$ $\bullet\bullet\bullet$ āa.	$\begin{array}{cccccccccccccc} \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \$ 000 000000000000 0000000 0 o 00000 $\bullet\bar{\bullet}\bar{\bullet}$ 0.0.0 @@ 00 ٠ 0000 00 0000000 000000 00000000 ${\begin{smallmatrix} 0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&$ 00000000 0000000 0000000 000000 00000 00000 0.000 0000 $\ddot{\bullet}\ddot{\bullet}\dot{\bullet}$ 86 $\ddot{\bullet}$ 00 $\ddot{\phantom{1}}$	000 0.00 $0.0.0.0$ ** * $\begin{smallmatrix} 0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&0&$ 000000000000 0 * ** 000000 0000000000 $\begin{array}{ccccccccccccccccc} \bullet & \bullet & \bullet & \bullet & \circ & \bullet & \circ \end{array}$ $\circ$ 38	00 $^{\bullet\bullet}$ 0000000 000 0000000000000000 ${\small \begin{array}{cccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc$ $0.00000000000000000000000000000000000$ 0000000000000000 ٠ $\ddot{\bullet}$ $\bullet\bullet\bullet$ ٠ ۰õ 00 ÷ $\bullet$ 0000 00000 000 0000 0.01 0 0 0 $\circ$ $\begin{array}{cccccccccccccc} \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \$ ,,,,,,,,	$\ddot{}$ $-0.0$ ٠ ō۰ ះំ
REVERSE VENDING	RECYCLING		MINING		FOOD*
Nordic $^{\sim}$ 15.300 $^{\sim}29,500$ Germany Other Europe $^{\sim}$ 14,200 North America $^{\sim}$ 15,900 Rest of the world $^{\sim}3.500$	FMFA Americas Asia Other	$^{\sim}3.500$ ~700 $^{\sim}600$ $^{\sim}20$	Europe US / Canada Australia South Africa Other	$^{\sim}10$ $^{\sim}30$ ~1.5 ~25 ~30	EMEA Americas Asia	$^{\sim}2,900$ $^{\sim}2,700$ ~7600

The results announcement will be broadcasted 19th of July at 08:00 CET via live webcast. Link to webcast for this and previous releases are available at https://TOMRA.com/en/investor-relations/webcasts/

For further information contact: Espen Gundersen, Deputy CEO / CFO, Tel: +47 97 68 73 01 Elisabet V. Sandnes, Vice President Investor Relations / M&A, Tel: +47 97 55 79 15