Interim Report January – September 2015

THIRD QUARTER 2015
Sales increased by 5% compared to the same period last year. Normally, flooding
or other weather events during the summer and early autumn boost sales in the
third quarter, which was not the case in 2015. An increase in fire and large
loss damage, in addition to last year’s gain of major contracts in the UK,
compensated for the slow growth in water damage. Order intake in the third
quarter was 1% below last year, which included flooding in Germany, the UK,
Sweden and Denmark.

  · Operating profit before amortisation and non-recurring items (EBITA before
NRI) amounted to EUR 4.7 million (3.2). This trend is attributable to
operational improvement programs in several countries and restructuring projects
in Germany and the US. During the second quarter, Polygon in the US discontinued
its activities in the Property Damage Restoration (PDR) business and decided to
focus on the more profitable Temporary Climate Solution (TCS) business. Both
Germany and the US improved their results and efficiency through the programs.
Operating profit in Europe was doubled and in North America the result turned
from negative to a surplus.
  · Operating profit (EBITA) amounted to EUR 4.4 million (1.4).

JANUARY – SEPTEMBER 2015

  · Sales increased by 8% compared to the same period of last year, due to
increased fire and large loss damages.
  · Operating profit before amortisation and non-recurring items (EBITA before
NRI) amounted to EUR 12.5 million (7.2). The increase in profit is attributable
to leverage on the sales growth.
  · The country presidents in Germany and the US were replaced during the second
quarter, at the same time that both countries initiated restructuring programs.
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, amounted to EUR 4.8 million. Last year the restructuring charges
amounted to EUR 6.2 million
  · Lars-Ove Håkansson, previously CEO and Chairman of Skanska, and Petter Darin
from Triton Advisers (Sweden) AB were elected as board members during Q2.

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

Comments from the CEO

The positive trend continues to increase pace

What encourages me most is the quality improvement in our current earnings. In
2015 we have not been aided by weather conditions to the same extent as last
year. We have worked hard on what we refer to as “the basics” of the Polygon
model, meaning improvements in our structure and our processes, while focusing
on tapping the full potential of our people. So far this has proven to be a
successful way to improve the business.

The countries that have come furthest in implementing the Polygon Model are now
focusing on introducing new services and concepts. Examples of this include
emergency services and construction climate control. In the latter case we
control the moisture levels, perform live video streaming from policyholders
homes and provide construction drying (heat).

In late 2014 and early 2015, we acquired a company in Austria that is active in
property management and a document business in the UK in order to broaden our
services in Property Damage Control. Making acquisitions and initiating major
projects are at the most advanced stage of our step-by-step philosophy, and are
only sanctioned for counties where the base is strong.

During the third quarter alone, we raised our operating EBITA level by close to
50%, and for the entire period we improved the operating profit over 70%. This
development is favourable, considering the below average effect of external
events. The rolling twelve-months operating profit is now at EUR 17 million.

The above mentioned restructuring programs have been key drivers to improve the
profit, as they were executed in two of the largest operations in the Group. In
Germany, the structure has been streamlined resulting in lower costs. In the US,
we have focused the business towards TCS and, as in Germany, have reduced the
indirect expenses. The managements in the Nordic countries and the UK have
struggled with a market characterised by a declining numbers of claims, but have
nevertheless managed to improve the results through operational improvements.

The recently appointed country presidents have continued to demonstrate improved
performance. We are striving to grow the business, boost our operational
efficiency and achieve leverage through an optimal indirect structure.

Short-term outlook
New framework agreements and effects from productivity measurements should
partly compensate for the lack of order intake from normal weather events. If
the absence of weather-related events continues, we expect to see some
unfavourable effects during the fourth quarter. In the corresponding quarter
last year, order intake from water damages was strong following several floods.
Indirect costs were reduced after the restructuring projects in the US and
Germany.

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 third quarter of 2015
Consolidated sales amounted to EUR 105.3 million, an increase of 5% compared to
the same quarter of last year. Organic growth, excluding foreign exchange and
acquisition effects, amounted to 4%. Growth in Europe was 7% while North America
was 14% below last year’s sales in local currency. The lack of weather events
that normally occur in the third quarter, resulted in an unfavourable sales mix
with an increasing share of non-water-related jobs, which have lower margins.
Order intake in the third quarter was on the same level as last year.

Consolidate operating profit before amortisation and non-recurring items (EBITA
before NRI) amounted to EUR 4.7 million (3.2). Earnings in most markets have
been positively impacted compared to last year as an effect of restructuring
programs in previous periods, in addition to the restructuring initiated and
executed during the second quarter of this year. The programs in both Germany
and the US had positive effects in the third quarter.

Restructuring costs in the third quarter decreased to EUR 0.3 million and
consisted mainly of redundancy costs. Operating profit (EBITA) amounted to EUR
4.4 million (1.4).

Administrative closing of the large NYCHA project in the US is ongoing. The
project is expected to be closed during the fourth quarter.

Net financial expenses for the period amounted to EUR 3.2 million (0.8),
including a foreign exchange loss of EUR 1.0 million. Last year the foreign
echanges differences were positive at EUR 1.5 million. The loss before tax for
the period amounted to EUR 0.1 million (0.7), and net profit was EUR 0.0 million
(loss 0.8).

Net sales and profit for the first nine months of 2015
Consolidated sales amounted to EUR 325.4 million, an increase of 8% compared to
the same period of last year. Organic growth excluding foreign exchange and
acquisition effects amounted to 7.5%. Europe had a growth rate of 9%, while
North America was 6% below last year’s sales in local currency due to a decline
in Canada and NYCHA sales booked in the third quarter. 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.
Consolidated operating profit before amortisation and non-recurring items (EBITA
before NRI) amounted to EUR 12.5 million (7.2), an improvement of 74% compared
to the same period of last year. The improvement is mainly attributable to the
second and third quarters. The first quarter of 2014 was satisfactory, while the
second quarter was weak. The pace of activity last year started to rise towards
the end of the third quarter and activity in the fourth quarter was high. The
improved result is explained by the effects of previous restructuring and new
initiatives. Twelve out of thirteen countries have improved their results
compared to last year.

Restructuring costs amounted to EUR 4.8 million (6.2), of which nearly all was
recognised in the second quarter. Operating profit (EBITA) amounted to EUR 7.7
million (1.0).

Net financial expenses for the period amounted to EUR 5.1 million (7.5),
including foreign exchange gains of EUR 0.8 million (1.9). The loss before tax
for the period amounted to EUR 1.6 million (10.7), and the net loss was EUR 1.6
million (10.3).

Cash flow and financing
Cash flow from operating activities during the third quarter of 2015 amounted to
EUR 4.7 million (neg: 1.8) and cash flow before financing activities amounted to
EUR 1.9 million (neg: 4.0). Due to the NYCHA project and work in progress, as
part of the business activity in the quarter, working capital has increased
since year-end 2014.

Total interest-bearing net debt amounted to EUR 107.4 million (December 2014:
101.7).

Equity amounted to EUR 40.1 million (December 2014: 42.4).

The Group’s liquidity buffer amounted to EUR 26.0 million (December 2014: 31.9),
consisting of cash and cash equivalents of EUR 16.6 million (December 2014:
21.5) and unutilised contracted loan commitments of EUR 9.4 million. (December
2014: 10.4)

Capital expenditure
Capital expenditure during the third quarter of 2015 amounted to EUR 2.8 million
(2.2).

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 result for Polygon AB for the third quarter amounted to a
loss of EUR 62 thousand (loss 89).

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 are 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, 13 November 2015


Evert Jan Jansen
President and CEO


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