Interim Report January – March 2016


  • Somewhat soft top line, 1.5% lower than in the same period last year. However, underlying organic growth showed a positive trend, increasing by 3.3% excluding the closure of the PDR activities in the US and currency effects. Additionally, the UK market saw some effects from flooding but most of the invoicing is expected to come in Q2.
  • Order intake for the quarter was slightly lower than last year’s but was impacted by some large loss orders that came in just after the quarter cut-off date. Despite this, the underlying business remains a bit slow after another mild winter.
  • Adjusted EBITA amounted to EUR 6.1 million (4.4), an increase of 39% compared to the previous year. The main result improvement came from continental Europe driven by Germany which, along with the US, is continuing to perform well following the restructuring activities last year.
  • Operating profit before amortization (EBITA) was EUR 5.8 million (4.4), an increase of 32%. Non-recurring items were on a low level in both 2016 and 2015.
  • Cash flow from operating activities of EUR 0.7 followed the seasonal pattern. Net debt was EUR 100.8 million (107.4).
  • The Board of Directors was further strengthened in January 2016 with the addition of Ole Skov.

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

Comments from the CEO

Polygon off to a strong start in 2016

The restructuring programmes that were executed during the second half of 2015 continue to deliver a strong contribution to our Q1 performance.

Both Germany and the US show impressive improvements in their results and together represent a large part of the total adjusted EBITA increase of 39% for the Group. The German business continues to pick up pace under the new leadership, in combination with a much lower cost structure. The decision to focus on Temporary Climate Solutions in the US has paid off with a significant increase in gross margin, whilst reducing overheads. Polygon Group now has stable country management teams in place and we are seeing the positive effects of their strong leadership cascade down into the country organizations. The double-digit improvement compared to an already strong quarter last year was achieved in challenging market conditions and is a direct result of a well functioning organization. The investment in creating a clear and simple structure, in combination with a strong company culture that has been built over the last two years, are the key drivers for the improved performance.

We have, as mentioned before, worked hard and diligently on getting the basics in place. We have seen a consistent improvement in performance in terms of both profitability and customer satisfaction. The results of our annual employee survey have again improved compared to the previous year and are well above the average for comparable service companies. Our philosophy of continuously investing in leadership skills and taking care of our people first has contributed to a highly motivated and engaged workforce, which in turn has led to satisfied customers and healthy results!

The most important side effect of our strong platform is that it enables us to focus on improving our service delivery processes to improve gross margins, whilst at the same time starting to prepare for growth in new service lines and bolt-on acquisitions in our most mature countries. The expected improvement in cash flow from increasing profits, substantially reduced restructuring and continuous control of working capital, can be used to finance acquisitions as and to reduce our net debt.

Looking more closely at the results, we also need to conclude that we face a lower growth rate than we were aiming for, in spite of some positive effects from major flooding in the UK. The closure of projects from the UK event is slow and invoicing is expected to occur during Q2. The closing down of the Property Damage Restoration services in the US also had a negative effect on volumes compared to the previous year. Adjusted for currency and the aforementioned US effects, organic growth amounts to 3.3%. Due to warm winter conditions and a general lack of damage, the reported “business as usual” claim level, continues to be low. Efficiencies, with regard to both direct costs resulting in improved gross margins and indirect savings from restructuring projects last year, are the main drivers behind the improved results. Nine out of our 13 countries show increased profitability compared to last year.

Preparations for the introduction of our new field force system are still in progress and pilots are expected to take place in Austria and the Netherlands during Q3. The rollout to the remaining countries will take place once the system has been successfully piloted and is expected to further enhance our service delivery process, resulting in continued gross margin improvements.

Short-term outlook

The effects of business optimization projects and the strategy shift in the US should contribute positively in 2016. Weather-related events in 2016 are expected to 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 procurement centralization, 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 conditions, which will consequently increase water damages.

Net sales and profit for the first quarter of 2016

Consolidated sales amounted to EUR 109.4 million, a decrease of 1.5% compared to the same quarter of last year. The main reason behind the decrease is the closure of the PDR business in the US. Organic growth, excluding the effect in the US and currency effects, was positive at 3.3%. Continental Europe, driven by Germany, showed growth of close to 5%. The Nordic area continued to suffer from the mild winter weather with some local exceptions. In North America, sales in local currency were down by 34% due to the shift to only TCS activities in the US and the continued impact on Canada from a slow market and structural changes. On a like-for-like basis, excluding the PDR business, the US revenues increased by 15%.

Order intake was lower than last year but orders from the flooding in late December in the UK and large loss orders gained during the initial days of Q2 will have a positive impact in Q2.

Adjusted EBITA of EUR 6.1 million (4.4) improved by 39%. The impact of last year’s restructuring and structural improvement, resulting in lower indirect expenses and increased efficiency in several countries, is behind the development. The main improvement is in Continental Europe driven by Germany and strong development in Austria. Non-recurring costs amounted to EUR 0.3 million (0.0). Operating profit before amortization (EBITA) was EUR 5.8 million (4.4).

Net financial expenses for the period amounted to EUR 2.7 million (positive: 0.8) of which EUR 2.0 million refers to interest expenses and EUR 0.7 million refers to exchange rate losses. In the first quarter of 2015, interest expenses amounted to EUR 1.8 million while exchange rate gains amounted to EUR 2.6 million resulting in a positive financial net of EUR 0.8 million.

Profit before tax amounted to EUR 1.8 million (3.8) and net profit was EUR 1.7 million (3.7).

Cash flow and financing

Cash flow from operating activities during the first quarter was EUR 0.7 million (0.6) which followed the normal seasonal pattern with a working capital increase. Working capital was below last year’s level both in number of days as well as in absolute numbers.

Total interest-bearing net debt amounted to EUR 100.8 million (December 2015: 96.2).

Equity amounted to EUR 44.2 million (December 2015: 42.3).

The Group’s liquidity buffer amounted to EUR 31.6 million (December 2015: 36.5), consisting of cash and cash equivalents of EUR 22.0 million (December 2015: 26.5) and unutilized contracted loan commitments of EUR 9.6 million. (December 2015: 10.0)

Capital expenditure

Capital expenditure was driven by focus on TCS and amounted to EUR 4.0 million (2.5).

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%. The net loss for Polygon AB for the first quarter amounted to EUR 50 thousand (63).

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 2015 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.


The Board of Directors of Polygon AB (publ) or any of its subsidiaries may from time to time resolve to purchase notes issued by Polygon AB (publ), which are listed on Nasdaq Stockholm, on the market or in any other manner. Any purchase of notes will be made in accordance with the terms and conditions of the notes and the applicable laws and regulations.

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 2015. More detailed accounting policies can be found on pages 11-16 of the Annual Report for 2015.

A number of standards and changes in standards are effective from 1 January 2017. Polygon does not intend to apply these in advance and the overall assessment is that they will have no material 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 May 2016

Evert Jan Jansen
President and CEO

For more information please contact:
Mats Norberg, CFO, + 46 70 331 65 71
Email address:


About Us

Polygon is a Global Expert and the European market leader in Property Damage Control. On three continents and in 13 countries, our 3000 specialists prevent, control and mitigate the effects of water, fire and climate. Our innovative and tailor-made solutions combine people, knowledge and technology for a wide range of customer segments.