Interim Report January – December 2015

FOURTH QUARTER 2015

  · Sales decreased as expected compared to the same period last year with 3.8%
due to lack of weather events during the autumn and the closure of PDR activity
in the US. An increase in fire, effects from contracts signed in the UK in the
late 2014 and growth from large loss projects in Germany compensated for the low
level of reported damages. Order intake increased late in the quarter driven by
floods in the UK.
  · Operating profit before amortisation and non-recurring items (EBITA before
NRI) amounted to EUR 7.6 million (4.6). Q4 2014 was affected by a cost of EUR
1.9 million after revaluation of the legacy NYCHA project in the US. Germany and
the US continued to improve their performance following the restructuring in Q2.
  · The operating profit (EBITA) was EUR 4.8 million (3.7). This included a
write down of EUR 3.0 million on IT-systems.

JANUARY – DECEMBER 2015

  · Sales increased by 4.7% compared to the same period of last year. Organic
growth excluding the effects of two acquisitions, FX changes and the closure of
PDR activity in the US was 4.0%.
  · Operating profit before amortisation and non-recurring items (EBITA before
NRI) amounted to EUR 20.1 million (11.8). The increase in profit is attributable
to leverage on the sales growth connected as well as cost reductions from
restructuring in Germany and in the US, and optimisation programs. The gross
margin was negatively affected by reduced WDR activity due to the lack of
flooding’s and other weather events. In total eleven out of thirteen countries
improved their results compared to last year.
  · The country presidents in Germany and the US were replaced during the second
quarter, at the same time that both countries initiated restructuring
programmes. The Group Management at Polygon’s head-office in Stockholm has been
reduced from five to three members. Restructuring charges, mainly attributable
to Germany and the US, and the depreciation of IT-systems amounted to EUR 7.6
million (7.1).
  · Cash flow improved as a result of the improved profitability. Net debt was
reduced by EUR 5.6 million.
  · Lars-Ove Håkansson and Petter Darin were elected as board members during Q3.
Additionally Ole Skov joined the board in Q1 2016.

Group Key Figures
For Group Key Figures table, please refer to attached file below.

Comments from the CEO

2015 - a turning point after a period of disappointments

The list of accomplishments in 2015 is long, but perhaps most noteworthy are the
effects of the restructuring programmes in Germany and in the US. They both
demonstrated strong performance during the autumn following the implementation
of new structures in May, and in the US also a strategy shift which involved
closing down PDR activities and focusing on TCS.

The improvement is even better than the figures show as 2015 was a year with
almost no significant weather events. This statement is confirmed by several
large insurance companies, which have reported a reduction in the number of
claims. In the previous few years, we had both large floods and more harsh
winter weather. Organic growth excluding currency effects, acquisitions and the
effects from the new structure in the US was 4%.

The simple conclusion from this is that the quality of our earnings has
improved. We have developed our organisation and begun the implementation of the
Polygon model. The most significant driver was the change in management
philosophy to one that is truly decentralised, with a bottom-up approach that
provides clear accountability. This was even clearer after the reorganisation of
the headquarters in Stockholm.

The figures for the full year show an improvement in the results before
restructuring of close to 70%. Although Q4 in the previous year was boosted by
weather effects (floods in Germany, the Nordic area and the UK) Polygon made a
strong improvement. The effects from restructuring in Germany and the US are the
main drivers for the improvement in 2015 but it is notable that only two
countries performed below previous year. This confirms the strong management set
-up we now have in the Group.

In late 2014, we made an acquisition in Austria followed by an acquisition in
the UK in early 2015 (total sales of EUR 4 million). Making acquisitions and
taking on major projects is the last step in our model and is only sanctioned in
countries where the base is strong.

As we enter 2016, we will continue to focus on our people first, based on a
strong conviction that happy employees lead to satisfied customers and, as a
result, healthy profits. We conduct annual employee surveys and we work
intensively with CSR within an initiative we call Our Responsibility. This
important programme has the purpose of encouraging as well as protecting our
employees. The Polygon model will be rolled out on a wider scale boosted by the
Polygon Model Academy with the goal of broadening the number of ambassadors to
spread the important message of the Polygon Model throughout the whole
organisation.

Another important focus is to implement a new mobile field force system -
Metrix. We will start piloting the system in Austria and the Netherlands in Q2
2016.

Short-term outlook
The effects from business optimisation projects and the strategy shift in the US
should contribute positively in 2016. Weather-related events in 2016 should also
contribute positively as 2015 was a year with almost no weather events.

Market development
There are several market trends in the property damage restoration market that
are benefiting larger players like Polygon, such as the centralisation of
procurement, the customer preference for one-stop-shops and the more complex
requirements for front-end IT systems. Global warming is gradually increasing
rainfall levels and extreme weather, which will consequently increase water
damages.

Net sales and profit for the fourth quarter of 2015
Consolidated sales amounted to EUR 113.4 million, a decrease of 3.8% compared to
the same quarter of last year. The decrease was expected due to the strong
quarter last year after the weather events in Q2 and Q3. The Nordic area in
particular suffered from the warm weather in 2015. The decline in Europe was
0.7%, while North America was approximately 40% below last year’s sales in local
currency. The strategy shift in the US is the main explanation behind the sharp
sales decrease.

The lack of weather events has resulted in an unfavourable sales mix with an
increasing share of non-water-related jobs, which have lower margins. Order
intake improved late in the period mainly as a result of floods in the UK. Sales
from this event will occur in Q1 and Q2 2016.

Consolidate operating profit before amortisation and non-recurring items (EBITA
before NRI) amounted to EUR 7.6 million (4.6). The improvement is to a large
extent attributable to the US. Germany improved from a relatively strong quarter
last year.

Restructuring costs was EUR 2.8 (0.9) million connected to a write-down on IT
investments. The operating profit (EBITA) was EUR 4.8 million (3.7).

The administrative closure of the large NYCHA project in the US is almost
finished. The remaining issues are small.

Net financial expenses for the period amounted to EUR 1.7 million (4.0). A large
extent of this difference is attributable to foreign exchange losses in 2014.

The profit before tax for the period amounted to EUR 1.8 million (loss 2.0), and
net profit was EUR 1.8 million (loss 0.2).

Net sales and profit for the full year of 2015
Sales amounted to EUR 438.7 million, an increase of 4.7% compared to the same
period of last year. Organic growth excluding foreign exchange, the closure of
the PDR activity in the US and acquisition effects was 4.0%. Europe had a growth
rate of 6.1%, while North America was 24.2% below last year’s sales in local
currency due to the new strategy in the US, NYCHA sales booked in 2014 and a
decline in Canada. Due to the lack of events and a mild winter, water-related
sales, which carry a higher gross margin, have grown at a slower pace than other
service lines.

Operating profit before amortisation and non-recurring items (EBITA before NRI)
amounted to EUR 20.1 million (11.8), an improvement close to 70% compared to the
same period of last year. The improvement is attributable to the three last
quarters. The first quarter of 2015 was on the level with a relatively good
first quarter in 2014, while the improvements in the three last quarters have
been strong due to the effects from restructuring and optimisation projects.
Eleven out of thirteen countries improved their results compared to last year.

Restructuring costs amounted to EUR 7.6 million (7.1), of which EUR 4.5 million
was recorded in the second quarter relating mainly to the restructuring in
Germany and the US. The central functions were scaled back in Germany and the US
business was focused on TCS, moving out of the PDR segment. EUR 3.0 million was
booked as a write down on IT systems in the fourth quarter.

The operating profit (EBITA) was EUR 12.5 million (4.7).

Net financial expenses for the period amounted to EUR 6.8 million (11.5). The
main part of the difference between the years is attributable to lower foreign
exchange losses during 2015 and extra cost in connection with the refinancing of
the group in 2014.

The profit before tax for the period amounted to EUR 0.2 million (loss 12.6),
and the net profit was EUR 0.2 million (loss 10.5).

Cash flow and financing
Cash flow from operating activities during the fourth quarter of 2015 amounted
to EUR 15.0 million (10.9) and cash flow before financing activities was EUR
12.4 million (5.2). Working capital was slightly below last year due to lower
business activity. Large part of NYCHA receivables was resolved in the last
quarter.

Total interest-bearing net debt amounted to EUR 96.2 million (December 2014:
101.8).

Equity amounted to EUR 44.0 million (December 2014: 42.4).

The Group’s liquidity buffer amounted to EUR 36.5 million (December 2014: 31.9),
consisting of cash and cash equivalents of EUR 26.5 million (December 2014:
21.5) and unutilised contracted loan commitments of EUR 10.0 million. (December
2014: 10.4)

Capital expenditure
Capital expenditure during the fourth quarter of 2015 amounted to EUR 2.7
million (5.5).

Parent Company
The consolidated figures in this report are presented at the consolidated level
for Polygon AB. The Parent Company, Polygon AB (corporate identity number 556816
-5855), directly and indirectly holds 100% of the shares in all subsidiaries in
the Group, except for the company in Denmark, in which the non-controlling
interest is 24.2%. Net profit for Polygon AB for the fourth quarter amounted to
EUR 8.1 million (5.4).

Significant risks and uncertainties
Around 75% of Polygons business consists of property damage control, which
follows a seasonal pattern of predictable demand. The remaining 25% is related
to more extreme and less predictable events caused by weather and fire. The
frequency of property damage can vary depending on circumstances beyond
Polygon’s control, the outdoor temperature and the weather. Since part of
Polygon’s cost structure is fixed, the proceeds of the operations are
unpredictable to some degree and vary from time to time.

Polygon is to a large extent dependent on its key customers, the insurance
companies, and must maintain mutually beneficial relationships with them in
order to compete effectively. Our top ten customers represent about 30% of
Polygon’s sales, with the newest customer on the top-ten list having a seven
-year relationship.

For further details about the Group’s risks and uncertainties, please refer to
the 2014 Annual Report.

Polygon’s view is that there have not been any significant changes during the
reporting period with regard to the risks and uncertainties that were presented
in the Annual Report.

Related-party transactions
The Group is under the controlling influence of Polygon Holding AB, the Parent
Company of Polygon AB. Polygon Holding AB is under the controlling influence of
MuHa No2 LuxCo S.á.r.l. There have been no material transactions with companies
in which MuHa No2 LuxCo S.á.r.l has significant or controlling influence.

Accounting policies
The interim report for the Group has been prepared in accordance with IAS 34
Interim Reporting. The interim report for the Parent Company has been prepared
in accordance with the Swedish Annual Accounts Act.

The Group applies the International Financial Reporting Standards (IFRS) as
adopted by the EU, and the Swedish Annual Accounts Act.

The accounting policies applied in this interim report is the same as those
applied in the consolidated annual accounts for 2014. More detailed accounting
policies can be found on pages 10-16 of the Annual Report for 2014.

A number of standards and changes in standards are effective from 1 January,
2016. Polygon does not intend to apply these in advance and the overall
assessment is that they will have no major impact on the Group’s result or
position.

The term “IFRS” used in this document refers to the application of IAS and IFRS
as well as the interpretations of these standards published by the IASB’s
Standards Interpretation Committee (SIC) and the International Reporting
Interpretations Committee (IFRIC).



The undersigned gives his assurance that this interim report provides a true and
fair overview of the business activities, financial position and results of the
Parent Company and the Group and describes the significant risk and
uncertainties to which the Parent Company and its subsidiaries are exposed.



Stockholm, 11 February 2016



Evert Jan Jansen
President and CEO



For more information please contact:
Mats Norberg, CFO, + 46 70 331 65 71
Email address: ir@polygongroup.com