TOMRA Systems — Interim / Quarterly Report 2018

Jul 19, 2018

19.07.2018

2 nd Quarter & 1 st Half 2018

HIGHLIGHTS

2Q 2018

• Order intake of 1,144 MNOK in TOMRA Sorting, up from 951 MNOK same period last year (up 20%)
• All time high order backlog of 1,585 MNOK in TOMRA Sorting, up from 1,093 MNOK at the end of second quarter 2017
• Revenues of 2,128 MNOK (1,972 MNOK in second quarter 2017), up 8%. Adjusted for currency and acquisitions, revenues were:
• Up 7% for TOMRA Group
• Up 10% in TOMRA Collection
• Up 4% in TOMRA Sorting
• Gross margin 43%, up from 42% in second quarter 2017
• Stable margins in TOMRA Collection
• Improved margins in TOMRA Sorting
• Operating expenses of 609 MNOK, up from 528 MNOK in second quarter 2017
• Higher activity
• BBC and New South Wales
• EBITA of 307 MNOK (306 MNOK in second quarter 2017)
• Cash flow from operations of 127 MNOK (170 MNOK in second quarter 2017)

1H 2018

• Revenues of 3,882 MNOK (3,536 MNOK in first half 2017), up 10%. Adjusted for currency and acquisitions, revenues were:
• Up 8% for TOMRA Group
• Up 7% in TOMRA Collection
• Up 9% in TOMRA Sorting
• Gross margin 42%, up from 41% in first half 2017
• Stable margins in TOMRA Collection
• Improved margins in TOMRA Sorting
• EBITA of 449 MNOK (464 MNOK in first half 2017)
• Cash flow from operations of 247 MNOK (292 MNOK in first half 2017)
• Dividend of NOK 2.35 per share paid out in May 2018, up from NOK 2.10 per share in 2017
• Strong performance in TOMRA Sorting
• Good momentum in all business streams
• New Zealand based BBC Technologies acquired, consolidated from 1 March 2018

CONSOLIDATED FINANCIALS

Second quarter

Revenues in the second quarter 2018 amounted to 2,128 MNOK compared to 1,972 MNOK in second quarter last year, up 8%. Organic, currency adjusted revenues were up 10% in TOMRA Collection Solutions and 4% in TOMRA Sorting Solutions.

Gross margin was 43% in the quarter, up from 42% in the same period last year, due to improved margins in TOMRA Sorting Solutions.

Operating expenses of 609 MNOK in second quarter, up from 528 MNOK same period last year, due to ramp-up in New South Wales, the acquisition of BBC and higher activity.

EBITA was 307 MNOK in second quarter 2017 versus 306 MNOK in the second quarter 2018.

Net finance was negative by 11 MNOK in the quarter, negatively influenced by currency losses of 4 MNOK.

Cash flow from operations in second quarter 2018 equaled 127 MNOK, down from 170 MNOK in second quarter 2017.

First half

Revenues in first half 2018 amounted to 3,882 MNOK compared to 3,536 MNOK in first half last year, up 10%. Organic, currency adjusted revenues were up 7% in TOMRA Collection Solutions and up 9% in TOMRA Sorting Solutions.

Gross margin was 42% in first half 2018, up from 41% in the same period last year, due to improved margins in Tomra Sorting Solutions.

TOMRA Group
-------------

(MNOK)	2Q18	2Q17	YTD18	YTD17
Revenues	2 128	1 972	3 882	3 536
Gross contribution	916	834	1 638	1 467
- in %	43 %	42 %	42 %	41 %
Operating expenses	609	528	1 189	1 003
EBITA	307	306	449	464
- in %	14 %	16 %	12 %	13 %
Including one-time costs in
operating expenses	4	4	4	8

Operating expenses were 1,189 MNOK in first half 2018, up from 1,003 MNOK last year.

EBITA was 449 MNOK in first half 2018 versus 464 MNOK in first half 2017.

Cash flow from operations in first half 2018 equaled 247 MNOK, compared to 292 MNOK in same period last year.

The equity ratio at the end of June 2018 was 49%, compared to 52% at end of June 2017. At the end of second quarter 2018 NIBD/EBITDA on a rolling 12 month basis was equal to 1.2x.

Excluding one time cost

BUSINESS AREA REPORTING

TOMRA Collection Solutions Second quarter

Revenues in the business area equaled 1,055 MNOK in the second quarter, up from 975 MNOK in second quarter last year. After adjustment for currency changes, revenues were up 10%.

Gross margin was 42%, unchanged from last year.

Operating expenses were 259 MNOK, up from 220 MNOK due to New South Wales and higher activity.

EBITA was 182 MNOK, down from 191 MNOK.

First half

Revenues in the business area equaled 1,989 MNOK in first half 2018, up from 1,852 MNOK in first half last year. After adjustment for currency changes, revenues were up 7%. Gross margin was 41%, unchanged from last year. EBITA was 303 MNOK, down from 335 MNOK.

Europe

Currency adjusted revenues in Europe were stable in second quarter, compared to second quarter 2017. There is still good momentum in Germany due to replacement demand.

On 28 May 2018, The EU Commission released its draft for a directive on single use plastic, which included a 90% recycling target of plastic bottles. If approved and ratified by the member states, this could represent significant business opportunities for TOMRA.

In addition, there are separate process in other markets in Europe, such as England and Scotland:

• The UK government announced in March 2018 plans for a deposit return scheme on single use drink containers in England. The introduction is subject to consultations that are currently taking place.

• The Scottish government also announced a deposit return scheme in 2017 and the public consultation ends 25 September 2018.

North America

Currency adjusted revenues were up 7% in second quarter compared to same period last year. Both machine sales as well as throughput-volumes improved from last year.

TOMRA Collection Solutions

(MNOK)	2Q18	2Q17	YTD18	YTD17
Revenues
- Northern Europe	162	149	310	288
- Europe (ex Northern)	403	411	812	794
- North America	413	404	735	746
- Rest of World	77	11	132	24
Total revenues	1 055	975	1 989	1 852
Gross contribution	441	411	815	762
- in %	42 %	42 %	41 %	41 %
Operating expenses	259	220	512	427
EBITA	182	191	303	335
- in %	17 %	20 %	15 %	18 %

Rest of the world

TOMRA continues to add collection points in New South Wales (Australia). The ramp-up period is expected to be finished during third quarter 2018.

4

BUSINESS AREA REPORTING

TOMRA Sorting Solutions

Second quarter

Revenues equaled 1,073 MNOK in second quarter 2018, up 4% in local currencies, adjusted for acquisitions (BBC). Gross margin was 44%, up from 42% same period last year due to improved margins in all business streams.

Operating expenses were up 8% (organic, currency adjusted)

EBITA increased from 131 MNOK in second quarter 2017 to 145 MNOK in second quarter 2018, driven by higher volumes and positive contribution from BBC.

The overall momentum in TOMRA Sorting has been satisfactory in second quarter 2018, with all business streams reporting improved performance compared to same period last year.

Despite all time high revenues (significant number of orders taken to P/L), the strong order intake during second quarter led to an all time high order backlog at the end of the quarter of 1,585 MNOK

TOMRA Sorting Solutions

(MNOK)	2Q18	2Q17	YTD18	YTD17
Revenues
- Europe	428	329	684	536
- North America	406	434	688	686
- South America	39	33	68	58
- Asia	88	92	203	200
- Oceania	71	82	157	139
- Africa	41	27	93	65
Total revenues	1 073	997	1 893	1 684
Gross contribution	475	423	823	705
- in %	44 %	42 %	43 %	42 %
Operating expenses	330	292	637	544
EBITA	145	131	186	161
- in %	14 %	13 %	10 %	10 %

First half

Revenues equaled 1,893 MNOK in first half 2018, up 9% in local currencies, adjusted for acquisitions (BBC). Gross margin was 43%, up from 42% the same period last year due to product mix and overall improved margins.

Operating expenses were up 8% (organic, currency adjusted)

EBITA increased from 161 MNOK in first half 2017 to 186 MNOK in first half 2018, driven by higher volumes and positive contribution from BBC.

Order intake TOMRA Sorting

Revenues TOMRA Sorting

Business streams

Food

Revenues in the Food business stream were stable in second quarter 2018 compared to second quarter 2017. The order intake was up in the same period.

Recycling

In the Recycling business stream, both revenues and order intake improved significantly in second quarter 2018 compared to second quarter 2017.

China's ban on import of waste (aka the National Sword program), has generated business opportunities both inside and outside China.

Mining

Improved revenues as well as order intake in the Mining business stream, but from a lower level.

BBC Technology Inc

TOMRA signed 23 February 2018 an agreement with the owners of BBC Technologies Ltd (BBC) to acquire 100 percent of the shares in BBC.

BBC is headquartered in Hamilton, New Zealand and is a leading provider of precision grading systems for blueberries and other small fruits. The company complements TOMRA's own fruit inspection and grading technology portfolio. BBC origins go back to 2000, and it currently employs around 145 people across locations in New Zealand, Chile, Europe and USA. About 2,350 BBC Technologies machines have been sold worldwide.

Closing of the transaction took place 1 March 2018, when TOMRA paid a total consideration of 363 MNOK, free of cash and interest bearing debt.

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, the emergence of e-commerce 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 in 2018 and the ramp-up in New South Wales will finish during third quarter 2018. The business area expects increased operating expenses in preparation for potential new markets.

TOMRA Sorting Solutions

Currently positive momentum in all business streams.

Currency

Reporting in NOK and with some NOK cost base, TOMRA will in general benefit from a weak NOK, measured particularly against EUR. With significant revenues in USD and costs in EUR and NZD, TOMRA Sorting is exposed to USD/EUR and USD/NZD.

ANNUAL GENERAL ASSEMBLY

The annual general assembly took place 24 April in Asker. All agenda points were approved, including a dividend of NOK 2.35 per share, which was paid out in May 2018.

THE TOMRA SHARE

The total number of issued shares at the end of second quarter 2018 was 148,020,078 shares, including 284,628 treasury shares. The total number of shareholders increased from 5,851 at the end of first quarter 2018 to 6,467 at the end of second quarter 2018. Norwegian residents held 24% of the shares at the end of second quarter 2018.

TOMRA's share price increased from NOK 164 to NOK 171 during second quarter 2018. The number of shares traded on the Oslo Stock Exchange in the period was 16 million, up from 9 million in the same period in 2017.

Asker, 18 July 2018

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		YTD		Full year
(MNOK)	Note	2018	2017	2018	2017	2017
Operating revenues	(5)	2 127,5	1 972,0	3 881,7	3 535,7	7 432,1
Cost of goods sold		1 176,9	1 112,1	2 178,1	2 019,6	4 184,3
Depreciations/write-down		34,5	26,1	66,0	49,5	107,0
Gross contribution		916,1	833,8	1 637,6	1 466,6	3 140,8
Operating expenses		573,6	494,2	1 123,8	939,4	1 949,0
Depreciations/write-down		35,7	34,0	65,2	63,6	123,5
EBITA	(5)	306,8	305,6	448,6	463,6	1 068,3
Amortizations		42,6	37,6	83,0	71,7	152,8
EBIT	(5)	264,2	268,0	365,6	391,9	915,5
Net financial income		(11,0)	9,1	-5,0	6,0	(28,4)
Profit before tax		253,2	277,1	360,6	397,9	887,1
Taxes		62,0	70,7	88,3	101,5	229,3
Net profit		191,2	206,4	272,3	296,4	657,8
Non-Controlling interest (Minority interest)		(11,2)	(15,9)	(16,4)	(21,1)	(47,1)
Earnings per share (EPS) continuing operations		1,22	1,29	1,73	1,86	4,14

STATEMENT OF OTHER COMPREHENSIVE INCOME	2nd Quarter		YTD	Full year
(MNOK)	2018	2017	2018	2017	2017
Net profit for the period	191,2	206,4	272,3	296,4	657,8
Other compreh. income that may be recl. to profit or loss
Translation differences	20,3	67,3	(165,4)	90,7	138,5
Other compreh. income that will not be recl. to profit or loss
Remeasurements of defined benefit liability (assets)	0,0	0,0	3,6		(35,7)
Total comprehensive income	211,5	273,7	110,5	387,1	760,6
Attributable to:
Non-controlling interest	18,2	13,4	17,8	18,1	39,2
Shareholders of the parent company	193,3	260,3	92,7	369,0	721,4
Total comprehensive income	211,5 #REF!	273,7	110,5	387,1	760,6

STATEMENTS OF FINANCIAL POSITION	30 June		31 Dec
(MNOK)	2018	2017	2017
ASSETS
Intangible non-current assets	3 662,0	3 364,4	3 412,0
Tangible non-current assets	1 065,7	839,1	997,9
Financial non-current assets	352,5	362,0	348,9
Inventory	1 290,3	1 219,6	1 197,2
Receivables	2 139,8	1 975,9	1 887,6
Cash and cash equivalents	338,7	499,1	593,5
TOTAL ASSETS	8 849,0	8 260,1	8 437,1
EQUITY & LIABILITIES
Equity	4 363,0	4 275,0	4 594,1
Non-controlling interest	161,5	197,0	143,3
Deferred taxes	231,0	203,5	114,2
Long-term interest bearing liabilities	1 274,5	1 480,4	1 280,1
Short-term interest bearing liabilities	570,7	-	-
Other liabilities	2 248,3	2 104,2	2 305,4
TOTAL EQUITY & LIABILITIES	8 849,0	8 260,1	8 437,1

STATEMENT OF CASHFLOWS			2nd Quarter		1st half
(MNOK)	Note	2018	2017	2018	2017	2017
Profit before income tax		253,2	277,1	360,6	397,9	887,1
Changes in working capital		(227,2)	(191,9)	(271,6)	(156,5)	60,8
Other operating changes		100,6	84,3	157,8	50,2	74,6
Total cash flow from operations		126,6	169,5	246,8	291,6	1 022,5
Cashflow from (purchase)/sales of subsidiaries		0,0	(68,0)	(362,8)	(479,6)	(423,6)
Other cashflow from investments		(168,1)	(67,8)	(306,9)	(146,2)	(505,9)
Total cash flow from investments		(168,1)	(135,8)	(669,7)	(625,8)	(929,5)
Sales/repurchase of treasury shares	(3)	32,1	23,9	32,1	23,9	(0,6)
Dividend paid out	(2)	(346,8)	(309,9)	(346,8)	(309,9)	(309,9)
Other cashflow from financing		126,6	228,7	515,4	720,7	398,6
Total cash flow from financing		(188,1)	(57,3)	200,7	434,7	88,1
Total cash flow for period		(229,6)	(23,6)	(222,2)	100,5	181,1
Exchange rate effect on cash		(28,5)	(3,7)	(32,6)	(0,6)	13,2
Opening cash balance		596,8	526,4	593,5	399,2	399,2
Closing cash balance		338,7	499,1	338,7	499,1	593,5

Condensed Consolidated interim financial statements (continued)

EQUITY (MNOK)	Paid in capital	Transl. reserve	Actuarial Gain / (Loss)	Retained earnings	Total majority equity	Minority interest
Balance per 31 December 2017	1 065,8	631,0	(76,1)	2 973,4	4 594,1	143,3
Net profit				255,9	255,9	16,4
Changes in translation difference		(166,8)			(166,8)	1,4
Remeasurement defined benefit liability			3,6		3,6
Dividend non-controlling interest				(8,7)	(8,7)
Purchase of treasury shares					0,0
Treasury shares sold to employees	0,2			31,5	31,7
Minority new consolidated companies					0,0	0,4
Dividend to shareholders				(346,8)	(346,8)
Balance per 30 June 2018	1 066,0	464,2	(72,5)	2 905,3	4 363,0	161,5

EQUITY	2nd Quarter			1st half
(MNOK)	2018	2017	2018	2017	2017
Opening balance	4 493,5	4 301,0	4 594,1	4 192,3	4 192,3
Net profit	180,0	190,5	255,9	275,3	610,7
Translation difference	13,3	69,8	(166,8)	93,7	146,4
Remeasurement defined benefit liability	0,0	0,0	3,6	0,0	(35,7)
Dividend non-controlling interest	(8,7)	(0,3)	(8,7)	(0,3)	(9,0)
Dividend paid	(346,8)	(309,9)	(346,8)	(309,9)	(309,9)
Net purchase of own shares	31,7	23,9	31,7	23,9	(0,7)
Closing balance	4 363,0	4 275,0	4 363,0	4 275,0	4 594,1

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 2017, except for the implementation of IFRS 15 (see note 7 below). 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 2017. 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 2017.

A number of new standards, amendments to standards and interpretations are not effective for the year ended 30 June 2018 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 16 Leases IFRIC 23 Uncertainty over Income Tax Treatments Amendments to IAS 28: Long-term interests in Associates and Joint Ventures Amendments to IAS 19: Plan Amendment, Curtailment or Settlement Amendments to IFRS 9: Prepayment Features with Negative Compensation

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

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.

TOMRA has completed an initial assessment of the potential impact of its consolidated financial statements but has not yet completed its detailed assessment. The actual impact of applying IFRS 16 on the financial statements in the period of initial application will depend on future economic conditions, including the Group's borrowing rate at 1 January 2019, the composition of TOMRA's lease portfolio at that date, the latest assessment of whether it will exercise any lease renewal options and the extent to which TOMRA chooses to use practical expedients and recognition exemptions.

So far, the most significant impact identified is that TOMRA will recognize new assets and liabilities for its operating leases. The impact of this is that the balance sheet is estimated to increase by 10-15 percent, and also have a negative impact on key figures using total assets as a variable such as ROCE.

In addition the nature of expenses related to those leases will now change as IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities.

No significant impact is expected for TOMRA's finance leases.

Other Standards

The current assessment of other new and revised standards is that TOMRA does not expect any material effects in the financial statements from the new standards.

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, to some extent the US Reverse Vending operations as well as the TCS Australian operations are influenced by seasonality. The seasonality mirrors the beverage consumption pattern, which normally is higher during the summer than during the winter.

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 7 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. BBC (acquired March 2018) 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 2018.

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/gross margin/operating expenses/EBITA is the change in revenues/gross margin/operating expenses/EBITA, 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).
• Order intake is defined as Order backlog at the end of a reporting period, minus Order backlog at the beginning of the reporting period, plus revenues record in the reporting period.

NOTE 2 Dividend paid

Paid out May 2017:	2.10 NOK x 147.6 million shares = NOK 309.9 million
Paid out May 2018:	2.35 NOK x 147.8 million shares = NOK 346.8 million

NOTE 3 Purchase of treasury shares

Net purchase of own shares	# shares	Average price		Total (MNOK)
2017
Sold to employees	242 606	NOK	98,67	23,9
Net purchased	200 000	NOK	122,80	24,5
2018
Sold to employees	171 712	NOK	184,90	31,7

NOTE 4 Interim results

(MNOK)			2Q18	1Q18	4Q17	3Q17	2Q17
Operating revenues (MNOK)			2 128	1 754	2 041	1 855	1 972
EBITA (MNOK)			307	142	301	303	306
EBIT (MNOK)			265	101	259	265	268
Sales growth (year-on-year) (%)			8 %	12 %	16 %	8 %	11 %
Gross margin (%)			43 %	41 %	43 %	43 %	42 %
EBITA margin (%)			14 %	8 %	15 %	16 %	16 %
EPS (NOK)			1,22	0,51	1,06	1,22	1,29
EPS (NOK) fully diluted			1,22	0,51	1,06	1,22	1,29
NOTE 5 Operating segments
	Collection Solutions		Sorting Solutions	Group Functions			Group Total

NOTE 5 Operating segments

SEGMENT
(MNOK)	2Q18	2Q17	2Q18	2Q17	2Q18	2Q17	2Q18	2Q17
Revenues	1 055	975	1 073	997			2 128	1 972
Gross contribution	441	411	475	423			916	834
- in %	42 %	42 %	44 %	42 %			43 %	42 %
Operating expenses	259	220	330	292	2 0	1 6	609	528
EBITA	182	191	145	131	(20)	(16)	307	306
- in %	17 %	20 %	14 %	13 %			14 %	16 %
Amortization	1 6	1 4	2 6	2 4			4 2	3 8
EBIT	166	177	119	107	(20)	(16)	265	268
- in %	16 %	18 %	11 %	11 %			12 %	14 %
SEGMENT	Collection Solutions		Sorting Solutions		Group Functions		Group Total

SEGMENT
(MNOK)	YTD18	YTD17	YTD18	YTD17	YTD18	YTD17	YTD18	YTD17
Revenues	1 989	1 852	1 893	1 684			3 882	3 536
Gross contribution	815	762	823	705			1 638	1 467
- in %	41 %	41 %	43 %	42 %			42 %	41 %
Operating expenses	512	427	637	544	4 0	3 2	1 189	1 003
EBITA	303	335	186	161	(40)	(32)	449	464
- in %	15 %	18 %	10 %	10 %			12 %	13 %
Amortization	3 2	2 6	5 1	4 6			8 3	7 2
EBIT	271	309	135	115	(40)	(32)	366	392
- in %	14 %	17 %	7 %	7 %			9 %	11 %
Assets	3 233	2 983	4 977	4 495	639	782	8 849	8 260
Liabilities	939	994	1 210	1 003	2 175	1 791	4 324	3 788

NOTE 6 BBC acquisition

On 26 February 2018, TOMRA Systems ASA, through its fully owned subsidiary TOMRA Sorting AS, signed an agreement with the owners of BBC Technologies Ltd (New Zealand) and BBC Technologies Limited (USA) (together "BBC") to acquire 100 per cent of the shares in BBC. BBC is headquartered in Hamilton, New Zealand and is a leading provider of precision grading systems for blueberries and other small fruits. The company complements TOMRA's own fruit inspection and grading technology portfolio. The majority of BBC Technologies sales have been from the blueberry segment, but the company also offers solutions for cherries, cherry tomatoes and

other small soft fruits.

BBC origins go back to 2000, currently employing around 145 people across locations in New Zealand, Chile, Europe and USA. About 2,350 BBC Technologies machines have been sold worldwide. With year-end in December the company generated a 2017 EBITDA of approximately 10 MNZD on total revenue of approximately 36 MNZD.

Closing of the transaction took place 1 March 2018, and TOMRA paid a consideration of 363 MNOK corresponding to a value of 63.8 MNZD, free of cash and interest-bearing debt. TOMRA acquisition was settled in cash, and the transaction was financed through existing drawing rights.

Accounting year ended December
Amounts in NZD million	FY15	FY16	FY17	FY181H
Profit and loss
Revenues	23	28	36	16
EBITDA	5	8	10	5
EBIT	4	6	8	4
Balance sheet	FY15	FY16	FY17	FY181H
Intangible non-current assets	1	-	-	-
Tangible non-current assets	2	4	2	2
Inventory	6	7	7	9
Receivables	9	9	9	7
Cash	3	2	5	5
Total assets	17	22	23	23
Equity	5	8	14	8
Interest bearing debt	7	6	-	-
Other liabilities	5	8	9	15
Total debt and equity	17	22	23	23

Unaudited numbers. Not harmonized with TOMRA Group accounting principles FY181H = January-June 2018

The figures are extracted from management accounts and adjusted for one-off income and expenses and are not harmonized with TOMRA accounting principles.

TOMRA has expensed NOK 4 million in acquisition related costs in the first quarter consolidated financial statements.

Preliminary Purchase Price Allocation NZD million Carrying amount Fair value adjustment Fair value Goodwill - 47.1 47.1 Other intangible non-current assets 0.1 9.6 9.7 Tangible non-current assets 1.6 - 1.6 Inventories 7.7 - 7.7 Receivables 10.0 - 10.0 Non-interest-bearing liabilities -10.3 -2.0 -12.3 Total consideration satisfied by cash 9.1 54.7 63.8 Net cash outflow: Cash consideration paid 66.9 Cash acquired 3.1 Net cash outflow 63.8

Total goodwill as of acquisition date equals 47.1 MNZD and is not tax deductible. The acquired goodwill is assumed to mainly relate to synergies to be realized over time, possibilities for efficiency improvements and a positive market development.

If the acquisition had occurred on 1 January 2018, revenues in 2018 for the TOMRA Group would have increased with approximately 2 MNZD and EBIT would have decreased by approximately 1 MNZD.

There is no liability for contingent consideration in the Purchase Price Allocation.

No significant gain or loss has been recognized in BBC or in TOMRA Group, related to the acquisition of BBC in 2018.

BBCs activities are reported as part of TOMRA Sorting Solutions (Food).

NOTE 7 IFRS 15 implementation

Amounts in NOK million	Collection	Sorting	TOTAL
	Solutions	Solutions
Northern Europe	310		310
Europe (ex Northern)	812		812
North America	735		735
Rest of the world	132		132
Europe 1)		684	684
North America 2)		688	688
South America		68	68
Asia		203	203
Oceania		157	157
Africa		93	93
Operating revenues	1989	1893	3882
Sales of RVMs / Sorters	634	1451	2086
Lease of RVMs / Sorters	175	41	215
Service	712	401	1 1 1 3
Material handling	468	0	468
Operating revenues	1989	1893	3882

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 2018 to the best of our knowledge have been prepared in accordance with IAS 34 Interim Financial Reporting and additional disclosure requirements as stated in the Norwegian Security Trading Act (Verdipapirloven), and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group.

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 2018

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 Employee Employee elected elected

Board member Board member President and CEO

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 ~95,700 installations in over 80 markets worldwide and had total revenues of ~7.4 billion NOK in 2017.

The Group employs ~3,550 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

The results announcement will be broadcasted 19th of July 08:00CET 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, Head of Group Strategy & Investor Relations, Tel: +47 97 55 79 15