PION Group — Interim / Quarterly Report 2017

Jul 21, 2017

INTERIM REPORT 1 JANUARY – 30 JUNE 2017

Quarterly period April-June

Reported revenue, earnings, cash flow and financial ratios relate to continuing operations, and do not include Poolia UK.

• Revenue amounted to SEK 194.2 (201.9) million.
• Operating profit amounted to SEK 6.0 (7.9) million, with an operating margin of 3.1% (3.9%).
• Profit before tax was SEK 5.6 (6.5) million.
• Profit after tax was SEK 4.2 (4.4) million.
• Earnings per share amounted to SEK 0.25 (0.26).
• Cash flow from operations for the quarter was SEK -1.3 (1.5) million.

From the CEO – Continued improvements in operations, but growth is slow in coming

Poolia's total revenue of approx. SEK 194 million for the second quarter was 3.9% lower than for the same period in 2016. Demand for our services remains strong in Sweden and Germany. We are also seeing increasing demand in Finland for both staffing and recruitment. However, the lack of candidates, particularly in staffing, continues to affect our growth opportunities, although we see a positive trend in the number of employed temps.

There was a strong variation in the number of working days and public holidays falling on weekdays between the first and second quarters of 2016 and 2017. However, on a sixmonthly basis, all countries had exactly the same number of working days in 2016 and 2017. The half-year figures therefore give a better insight into the development of the business.

Poolia's total revenue of approx. SEK 394 million for the first half of 2017 was 2.1% lower than for the same period in 2016. Poolia delivered an operating profit of SEK 13.4 million for the first half of the year, which is an improvement of SEK 61.4% from the same period in 2016. The operating margin was 3.4%, compared with 2.1% for the first half of 2016.

The Swedish operations reported an operating profit of SEK 5.4 (1.1) million for the first half of the year, with an operating margin of 2.0% (0.4%). The improvement is due to increased permanent placement revenue and good cost control. Operating profit for the German operations was SEK 7.4 (7.3) million for the first half of the year, with an operating margin of 7.3% (8.1%). The margin decline for the German operations was largely due to increased personnel initiatives in 2017, aimed at achieving staffing for continuing growth.

Interim period January-June

Reported revenue, earnings, cash flow and financial ratios relate to continuing operations, and do not include Poolia UK.

• Revenue amounted to SEK 393.8 (402.2) million.
• Operating profit amounted to SEK 13.4 (8.3) million, with an operating margin of 3.4% (2.1%).
• Profit before tax was SEK 13.0 (6.9) million.
• Profit after tax was SEK 9.3 (4.4) million.
• Earnings per share amounted to SEK 0.54 (0.26).
• Cash flow from operations for the period was SEK 7.3 (-9.9) million.
• The equity/assets ratio ended the period at 33.8% (29.5%), and the Group's equity per share was SEK 4.83 (4.16).

The Finnish operations reported an operating profit of SEK 0.6 (-0.1) million for the first half of 2017, with an operating margin of 3.0% (-0.5%). The significant margin improvement was an effect of previously implemented cost savings.

Cash flow from operations for the period was SEK 7.3 (-9.9) million and was primarily attributable to a decline in current receivables. The Group's liquidity and financial position are good.

New contracts signed during the quarter included ApoEx, Nasdaq, Kinnarps, AXA Försäkring, Stockholms Stad Fastighetskontoret and the Swedish Public Employment Service.

We continue to invest resources in marketing and sales in order to return to a growth phase, and we are continuously developing our business to become an even more attractive employer for temps.

I continue to have a positive view of Poolia's future. Poolia constantly shows improved profitability and is well equipped to continue its journey towards growth. Poolia's long-term goals and strategies stand firm.

Morten Werner Managing Director and CEO

Business concept

Poolia's business concept is to provide companies and organisations with the skills that meet their temporary or permanent needs for qualified professionals.

Poolia Quality

Poolia's business is the temporary staffing and permanent placement of qualified professionals. We specialise in the areas of Finance & Accounting, IT, Office Support, Human Resources, Sales & Marketing, Life Science & Engineering, Legal and Executive Search. This specialisation focuses our expertise and sharpens our knowledge of our clients' business operations. We understand our clients' staffing needs, and we have the processes and tests in place to ensure the client gets the right person. Our experience, specialisation, commitment, and working methods combine to create the quality that gives

APRIL – JUNE GROUP

Revenue

The Group's revenue for continuing operations declined by 3.9% to SEK 194.2 (201.9) million. Currency effects had a positive impact of 1.3% (0.0%) on revenue. Temporary staffing is the largest service area. Permanent placement's share of revenue was unchanged at 14.6%.

Operating profit for the Group's continuing operations amounted to SEK 6.0 (7.9) million, with an operating margin of 3.1% (3.9%). The Group's net financial items amounted to SEK -0.4 (-1.4) million. Profit before tax was SEK 5.6 (6.5) million. The Group's tax was SEK -1.4 (-2.1) million.

our clients a crucial advantage: Employees who not only perform, but also contribute. This is what we call Poolia Quality.

Market conditions

Demand for temporary staffing and permanent placement services in Sweden and Germany is strong. Finland's GDP is now back in positive figures and is expected to grow by over one percent in 2017. We are experiencing increased demand for our services. The purchasing managers' index for services in Sweden was at a historically high level of about 60.0 during the quarter. This is an indication that demand in the economy is likely to remain at a high level in the coming quarters. We maintain our positive view of the long-term outlook for the staffing industry.

POOLIA SWEDEN

Revenue

Poolia Sweden's revenue amounted to SEK 135.1 (146.1) million, a decline of 7.5% compared with the same period the previous year. Revenue was also affected by the fact that there were 5% fewer working days than in the same period the previous year.

Permanent placement's share of revenue was 16.1% (15.5%) during the quarter.

Earnings

Poolia Sweden's operating profit was SEK 3.8 (4.0) million. The operating margin was 2.8% (2.7%).

Poolia's Swedish operations continue to experience high demand for both temporary staffing and permanent placement services, with the latter also showing good growth. Our permanent placement clients are experiencing good demand and have a positive long-term view of the economy, which means they will increasingly recruit employees.

The development of temporary staffing operations continues to be adversely affected by intense competition for candidates.

Poolia Sweden

POOLIA GERMANY

Revenue

Poolia Germany's revenue amounted to SEK 49.2 (45.9) million, an increase of 7.2%. Currency effects had a positive impact of 4.4% (0.1%) on revenue during the quarter. Permanent placement's share of revenue declined from 12.6% to 11.8%.

Earnings

Poolia Germany's operating profit was SEK 1.9 (4.0) million. The operating margin was 3.9% (8.6%). Both the temporary staffing and permanent placement operations increased their revenue during the quarter.

Revenue and profitability were adversely affected by the fact that there were five fewer working days than in the same period the previous year. Also, all employees received statutory full pay without bringing in any revenue during the quarter's five public holidays that fell on weekdays. The operating margin was also negatively affected by increased personnel initiatives aimed at achieving staffing for continuing growth.

The office in Stuttgart, which opened in Q3 2016, continues to develop according to plan.

Share of group revenue in the quarter

POOLIA FINLAND

Revenue

Poolia Finland's revenue for the quarter amounted to SEK 9.8 (9.9) million, a decline of 1.0%. Currency effects had a positive impact of 4.4% (0.1%) on revenue during the quarter. Permanent placement's share of revenue declined from 11.3% to 9.2%.

Earnings

Poolia Finland's operating profit was SEK 0.3 (-0.1) million, with an operating margin of 3.1% (-0.7%).

Planned cost savings have been implemented and we are now focusing our efforts on sales and marketing to enable a return to growth.

Operating segments

Poolia's segment reporting is based on internal reporting, which means that the segment reporting format is geographical regions.

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, and for which separate financial information is available. The operating segment's operating results are reviewed regularly by the Company's chief operating decision maker, i.e. the Poolia Group's management group, in order to allocate resources to the segment and assess its performance.

Poolia's geographical segments are Sweden, Finland and Germany. With effect from the fourth quarter of 2013, Poolia UK is reported as a discontinued operation.

Comparative figures for prior periods have been restated. All Parent Company expenses are allocated to the operating segments.

Discontinued operations

Poolia's UK operations were divested on 28 February 2014. The only costs remaining in the companies are administrative expenses and a tax provision for the gain on the sale of the operations. The liquidation of the two companies is expected to be implemented during the third quarter of 2017.

• Profit/loss from discontinued operations for the second quarter was SEK -0.6 (0.0) million.
• Cash flow from discontinued operations for the second quarter was SEK 0.0 (-0.2) million.

REVENUE PER OPERATING SEGMENT

	2017	2016	2017	2016	2016
SEK millions	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jan-Dec
Poolia Sweden	135.1	146.1	272.4	291.1	552.7
Poolia Germany	49.2	45.9	101.2	89.9	190.1
Poolia Finland	9.8	9.9	20.1	21.2	41.9
Total revenue	194.1	201.9	393.7	402.2	784.7

OPERATING PROFIT/LOSS PER OPERATING SEGMENT

	2017	2016	2017	2016	2016
SEK millions	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jan-Dec
Poolia Sweden	3.8	4.0	5.4	1.1	5.1
Poolia Germany	1.9	4.0	7.4	7.3	17.0
Poolia Finland	0.3	-0.1	0.6	-0.1	0.9
Total operating profit/loss, continuing operations	6.0	7.9	13.4	8.3	23.0
Discontinued operations
Poolia UK	-0.6	0.0	-0.6	0.0	-0.7
Total operating profit/loss	5.4	7.9	12.8	8.3	22.3
Reversal of discontinued operations	0.6	0.0	0.6	0.0	0.7
Financial items	-0.4	-1.4	-0.4	-1.4	-2.5
Profit before tax and discontinued operations	5.6	6.5	13.0	6.9	20.5

JANUARY – JUNE GROUP

Revenue

The chart below shows the Group's revenue by segment during the period.

Liquidity and financing

The Group's cash and cash equivalents at 30 June 2017 were SEK 37.1 (17.7) million. Cash flow from operating activities for continuing operations during the period was SEK 7.3 (-9.9) million. The equity/assets ratio at 30 June 2017 was 33.8% (29.5%). Group transactions with one and the same lender are offset in the consolidated balance sheet. The Parent Company's credit balances and credit utilisation are recognised in the Parent Company's financial statements. The Group's Swedish business has a joint cash pool and an overdraft facility of SEK 40 (40) million. At 30 June 2017, SEK 18.8 (18.6) million of this amount had been utilised.

Earnings

Operating profit amounted to SEK 13.4 (8.3) million, with an operating margin of 3.4% (2.1%). The Group's net financial items amounted to SEK -0.4 (-1.4) million. Profit before tax was SEK 13.0 (6.9) million. The Group's tax expense was SEK -3.7 (-2.5) million.

Investments

The Group's investments in non-current assets during the period were SEK 0.4 (0.2) million.

Pledged assets and contingent liabilities

Poolia AB has pledged shares in subsidiaries as security for its bank overdraft facility.

The share

The Poolia share is listed on NASDAQ OMX Stockholm AB under the ticker POOL B. The number of shares issued is 17,121,996. The price on the reporting date was SEK 14.70. During the period, 3,315,585 shares were traded at a total value of SEK 54 million.

Dividend policy

According to Poolia's dividend policy, the annual dividend shall normally exceed 50% of the Group's profit after tax.

Employees

The average number of full-time equivalents was 1,356 (1,263). The total number of employees at 30 June 2017 was 1,478 (1,472).

Seasonal variations Number of working days in 2017:

	Sweden	Germany	Finland
Jan-Mar	64(61)	65(60)	64(61)
Apr-Jun	59(62)	59(64)	60(63)
Jul-Sep	65(66)	65(66)	65(66)
Oct-Dec	63(64)	60(62)	62(63)
Full year	251(253)	249(252)	251(253)

Parent Company

Group management, development and financial and IT management are centralised in the Parent Company. All Parent Company expenses are allocated to the operating segments. Revenue during the period was SEK 6.1 (10.3) million. Profit/loss after financial items was SEK -2.1 (-2.8) million.

Significant risks and uncertainties

Risks and risk management are described in Poolia's 2016 Annual Report. The risks can be summarised as economic fluctuations, dependence on clients and individuals, legislation and regulations, and financial risks. Significant risks and uncertainties at 30/06/2017 are unchanged from those at 31/12/2016.

Events after the end of the period

There were no significant events to report after the end of the period.

Related party transactions

There were no related party transactions during the period that had a significant effect on the Company's financial position and performance.

	2017	2016	2017	2016	2016
Amounts in SEK millions	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jan-Dec
Operating income	194.2	201.9	393.8	402.2	784.7
Operating expenses
Staff costs	-175.8	-176.1	-351.0	-359.7	-696.8
Other expenses	-11.8	-16.5	-28.1	-32.0	-61.2
Depreciation and amortisation of assets	-0.6	-1.4	-1.3	-2.2	-3.7
Operating profit/loss	6.0	7.9	13.4	8.3	23.0
Finance income	0.1	0.0	0.2	0.0	0.0
Finance costs	-0.5	-1.4	-0.6	-1.4	-2.5
Profit/loss before tax	5.6	6.5	13.0	6.9	20.5
Tax	-1.4	-2.1	-3.7	-2.5	-6.8
Profit/loss for the period from continuing operations	4.2	4.4	9.3	4.4	13.7
Discontinued operations
Profit/loss for the period from discontinued operations	-0.6	0.0	-0.6	-1.4	-2.0
Profit/loss for the period	3.6	4.4	8.7	3.0	11.7
Other comprehensive income
Items that will be reclassified to the income statement
Translation differences	0.6	0.9	2.6	1.3	2.9
Total comprehensive income for the period	4.2	5.3	11.3	4.3	14.6
Operating margin, continuing operations, %	3.1	3.9	3.4	2.1	2.9
Profit margin, continuing operations, %	2.9	3.2	3.3	1.7	2.6
Profit/loss for the period from continuing operations attributable to:
Shareholders of the Parent	3.6	4.4	8.7	3.0	13.7
Non-controlling interests	0.0	0.0	0.0	0.0	0.0
Basic and diluted earnings per share, SEK
Earnings per share from continuing operations
and discontinued operations	0.21	0.26	0.51	0.18	0.68
Earnings per share from continuing operations	0.25	0.26	0.54	0.26	0.80
Total comprehensive income attributable to:
Shareholders of the Parent	4.2	5.3	11.3	4.3	14.6
Non-controlling interests	0.0	0.0	0.0	0.0	0.0

Amounts in SEK millions	30/06/2017	30/06/2016	31/12/2016
Assets
Non-current assets
Goodwill	19.3	18.6	18.7
Other non-current assets	5.3	5.4	5.1
Deferred tax assets	10.1	11.6	11.2
Current assets
Current receivables	172.7	187.9	174.4
Cash and cash equivalents	37.1	17.7	36.6
Total assets	244.5	241.2	246.0
Equity and liabilities
Equity	82.6	71.3	81.6
Non-controlling interests	0.0	0.0	0.0
Total equity	82.6	71.3	81.6
Current liabilities
Interest-bearing liabilities	18.8	18.6	14.2
Other current liabilities	143.1	151.3	150.2
Total equity and liabilities	244.5	241.2	246.0

CONDENSED CONSOLIDATED BALANCE SHEET

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

	2017	2016	2017	2016	2016
Amounts in SEK millions	Apr-Jun	Apr Jun	Jan-Jun	Jan-Jun	Jan Dec
Profit/loss before tax	5.6	6.5	13.0	6.9	20.5
Adjustments	1.1	2.6	1.8	3.4	6.0
Income tax paid	-1.3	-3.2	-3.9	-4.3	-6.5
Cash flow from operating activities before changes in working capital	5.4	5.9	10.9	6.0	20.0
Increase (-)/decrease (+) in current receivables	-5.3	-2.5	3.4	-12.7	2.8
Increase (+)/decrease (-) in current liabilities	-1.4	-1.9	-7.0	-3.2	-9.5
Cash flow from operating activities	-1.3	1.5	7.3	-9.9	13.3
Cash flow from investing activities	-1.0	-0.2	-1.5	-0.2	-1.4
Dividend to shareholders	-10.3	-8.5	-10.3	-8.5	-8.5
Borrowings/Repayment of borrowings	14.7	5.9	4.6	16.7	12.2
Cash flow from financing activities	4.4	-2.6	-5.7	8.2	3.7
Cash flow for the period	2.1	-1.3	0.1	-1.9	15.6
Cash flow for the period, discontinued operations	0.0	-0.2	0.0	-0.2	-0.8
Cash and cash equivalents at beginning of period	34.5	19.8	36.6	20.2	20.2
Exchange differences	0.5	-0.6	0.4	-0.4	1.6
Cash and cash equivalents at end of period	37.1	17.7	37.1	17.7	36.6

	2017	2016	2016
Amounts in SEK millions	Jan-Jun	Jan-Jun	Jan-Dec
Opening balance	81.6	75.5	75.5
Total comprehensive income for the period attributable to shareholders of the Parent	11.3	4.3	14.6
Dividend to shareholders of the Parent	-10.3	-8.5	-8.5
Closing balance attributable to shareholders of the Parent	82.6	71.3	81.6
Non-controlling interests	0.0	0.0	0.0
Total equity, closing balance	82.6	71.3	81.6

CONDENSED INCOME STATEMENT – PARENT COMPANY

	2017	2016	2017	2016	2016
Amounts in SEK millions	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jan-Dec
Operating income	2.5	5.1	6.1	10.3	16.8
Operating expenses
Staff costs	-2.6	-2.6	-5.6	-5.5	-10.2
Other expenses	-0.5	-2.7	-1.6	-5.5	-8.6
Depreciation, amortisation and impairment of assets	-0.2	-0.4	-0.3	-0.5	-0.7
Operating profit/loss	-0.8	-0.6	-1.4	-1.2	-2.7
Finance income	0.1	0.0	0.1	0.0	5.7
Finance costs	-0.6	-1.5	-0.8	-1.6	-2.8
Profit/loss after financial items	-1.3	-2.1	-2.1	-2.8	0.2
Group contributions	-	-	-	-	8.6
Tax	0.3	0.0	0.5	0.0	-0.6
Profit/loss for the period	-1.0	-2.1	-1.6	-2.8	8.2
Other comprehensive income	-	-	-	-	-
Total comprehensive income for the period	-1.0	-2.1	-1.6	-2.8	8.2

CONDENSED BALANCE SHEET – PARENT COMPANY

Amounts in SEK millions	30/06/2017	30/06/2016	31/12/2016
Assets
Non-current assets
Investments in Group companies	23.6	23.6	23.6
Deferred tax assets	3.4	3.7	3.1
Other non-current assets	1.1	0.5	0.8
Current assets
Current receivables	0.8	1.8	0.6
Receivables from Group companies	43.4	42.3	51.6
Total assets	72.3	71.9	79.7

Equity and liabilities

Equity	5.5	6.4	17.3
Liabilities to Group companies	45.0	44.3	44.6
Interest-bearing liabilities	18.8	18.6	14.2
Other current liabilities	3.0	2.6	3.6
Total equity and liabilities	72.3	71.9	79.7

	2017	2017	2016	2016	2016	2016	2015	2015
	Apr Jun	Jan-Mar	Oct-Dec	Jul-Sep	Apr-Jun	Jan-Mar	Oct-Dec	Jul-Sep
Operating income	194.2	199.6	198.9	183.6	201.9	200.3	210.2	177.7
Growth, %	-3.8	-0.4	-5.3	3.3	8.0	9.9	17.3	9.0
Growth in local currency, %	-5.0	-1.1	-5.0	-0.2	8.0	10.1	16.5	8.2
Operating margin, %	3.1	3.7	4.4	3.2	3.9	0.2	3.3	2.4
Profit margin, %	2.9	2.5	4.4	2.6	3.2	0.2	5.3	3.7
Return on capital employed1, %	26.5	25.9	26.7	31.6	34.0	23.4	30.6	10.1
Return on total assets1, %	8.7	3.2	8.8	10.2	10.2	8.1	10.2	3.4
Return on equity1, %	18.6	25.9	14.9	20.3	22.0	16.9	21.3	13.9
Equity/assets ratio, %	33.8	37.4	33.2	31.0	29.5	31.3	32.4	29.6
Risk-bearing capital, %	33.8	37.4	33.2	31.0	29.5	36.6	32.4	30.5
Number of FTEs, average	1,357	1,354	1,271	1,198	1,247	1,276	1,275	1,211
Revenue per employee, SEK 000	143	147	157	153	162	157	165	147
Number of shares, average (000)	17,122	17,122	17,122	17,122	17,122	17,122	17,122	17,122
Number of shares, outstanding (000)	17,122	17,122	17,122	17,122	17,122	17,122	17,122	17,122
Basic earnings per share2, SEK	0.21	0.30	0.33	0.21	0.26	0.00	0.48	0.26
Equity per share, SEK	4.83	5.18	4.76	4.41	4.16	4.35	4.41	4.05

¹ Trailing12 months, incl. discontinued operations.

² No dilutive effects.

THE GROUP'S KEY FINANCIAL RATIOS BY PERIOD

	2017	2016
	Jan-Jun	Jan-Jun
Operating margin, %	3.2	2.1
Profit margin, %	3.3	1.7
Basic earnings per share1, SEK	0.50	0.26
Equity per share, SEK	4.83	4.16

¹ No dilutive effects.

NOTES

Note 1 Accounting policies

The interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act, and for the Parent Company in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities. Unless specified otherwise below, the accounting policies applied for the Group and the Parent Company are consistent with the accounting policies applied when preparing the most recent annual report.

New and amended IFRS standards and IFRIC interpretations which come into effect in 2017 have not had any significant effect on the Group's financial reporting.

DEFINITIONS

In this interim report, Poolia presents certain financial performance measures that are not defined under IFRS. Poolia believes that these measures provide useful supplementary information for investors and Company management as they allow for an evaluation of relevant trends. As not all companies calculate financial performance measures in the same way, these are not always comparable with measures used by other companies. These financial performance measures should therefore not be seen as a replacement for measures defined under IFRS. In the key ratios below, the average is the sum of the opening and closing values divided by two.

KEY RATIOS DEFINED UNDER IFRS

Earnings per share

Profit/loss for the period after tax divided by the average number of shares.

KEY RATIOS NOT DEFINED UNDER IFRS

Growth

Increase in operating income compared with the same period the previous year, expressed as a percentage. Risk-bearing capital Equity, including non-controlling interests and provisions for taxes, as a percentage of total assets. Return on equity Profit/loss after tax divided by average equity. Return on capital employed Profit/loss before tax plus finance costs divided by average capital employed. Return on total assets Profit/loss before tax plus finance costs divided by average total assets. Equity per share Equity divided by the number of shares outstanding. Revenue per employee Operating income divided by the average number of FTEs. Operating margin Operating profit/loss as a percentage of operating income. Equity/assets ratio Equity, including non-controlling interests, as a percentage of total assets. Capital employed Total assets less total current liabilities, including provisions for taxes. Profit margin Profit/loss before tax as a percentage of operating income. Operating profit/loss Operating income less operating expenses.

OPERATIONAL MEASURES

Number of FTEs, average

The total number of hours worked during the period divided by the normal number of working hours for a full-time employee.

The Board of Directors and CEO hereby certify that the interim report provides a true and fair view of the operations, financial position and financial performance of the Parent Company and the Group, and describes the material risks and uncertainties that the Parent Company and Group companies face.

Future reporting dates

Interim Report, Jan-Sept 2017 27 October 2017 Year-end report 2017 16 February 2018

Stockholm, 20 July 2017

Björn Örås Chairman of the Board Dag Sundström Board member

Lennart Pihl Board member

Marika Skärvik Board member

Anna Söderblom Board member

Morten Werner Managing Director and CEO

This interim report has not been reviewed by the Company's auditors.

Contact person: Morten Werner Managing Director and CEO Tel. +46 (0)70-636 25 25 morten.werner@poolia.com

POOLIA AB (PUBL) Kungsgatan 57 A Box 207 SE-101 24 Stockholm Tel: 08-555 650 00 Fax: 08-555 650 01 Corp. ID no.: 556447-9912 www.poolia.com