Impel : stable results following legislative amendments

Sales revenues increased in all areas of activities of the Group. In the first quarter of 2017, sales revenues increased in Facility Management by PLN 51 million comparing to the first quarter of 2016, amounting to PLN 409.9 million. Industrial Services reached PLN 47.6 million, an increase by PLN 13 million, whereas Digital Services and BPO reached PLN 88.5 million, an increase by PLN 10 million.

"We are particularly satisfied with the result in FM Security which by boosting sales, contributed the most to increase in revenues. We started cooperating with Volkswagen Group by offering our support to VW Motor Poland, Sitech Polska and VW Poznań located in Poznań i Września. We also concluded contracts with Ciech Group and Leonardo-PZL Świdnik. All contracts increase the Group's revenues by over PLN 22 million yearly and are designed for a long-term cooperation. The strategy of focusing on selected segments seems right, having strengthen our position on the market. At the same time, we prioritise activities aiming at our stronger presence in: financial sector, food sector, construction industry and military sector, real estate and commerce. We focus on those sales which can reach profitability parameters based on correctly calculated labour costs, including additional costs resulting from legislative amendments. We also would like to notice that as of 1 January 2017, Industrial Services constitutes a separate segment, meaning that our plans to develop services for industrial clients are being implemented. The segment is based on highly specialised technologies and human resources, in a specific regime, on a very demanding market. By separating this now independent segment, we increased the result in the first quarter. We stay optimistic about further development of these services in the Group's portfolio" - says Grzegorz Dzik, President of Impel S.A. Management Group.

On 28 March 2017, the Supervisory Board appointed Mr Mirosław Greber as a Management Board Member of Impel S.A. who as of 1 April 2017, is responsible for all commercial and marketing activities.

"The new strategy for commercial activities is to integrate all processes of reaching strategic clients and managing after-sales support in all segments of Impel Group. It's a highly specialised client-specific offer with in-depth after-sales analysis of product-price relation. We make increasing use of many state-of-the-art tools, such as: effective databases of clients, contact centres, effective transferring and monitoring of sales opportunities, closing the process with a single measuring system. Mr Mirosław Greber is also responsible for developing integrated sales. We observe the willingness to buy services as packages on the market, because it means stronger engagement and strengthened relation client-provided. By this approach, we both build competitive advantages in our business and guarantee clear-cut benefits to our clients. By consistently focusing on our product and commercial area, we achieve economic effectiveness of the whole Group and restrain low price competition to minimum", adds Grzegorz Dzik.

New provisions introducing a minimal wage for civil law contracts, in force as of 1 January 2017, had major impact on the results for the first quarter.

"We organised awareness-raising campaign for market actors and clients throughout the whole three-year period of legal modifications, namely charging civil law contracts with social insurance costs up to minimal salary, introducing minimal wage for civil law contracts, amendments related to tenders: mandatory employment contracts and removal of the single criterion - the lowest price. We make it clear that we need to take into account legislative amendments in our contracts, and that tenders based on the lowest price only are disadvantageous for both parties. Calculations based on underestimated prices and unfair salaries are the curse of the current Polish economic reality. However, positive outcomes of our efforts are visible already in the first quarter, as 99% of all planned contracts were valorised as of 31 March 2017.Our operating profit accounted to PLN 9 million in the context of increased labour costs and yet, profitability of our services decreased. We know however that our industry has already gone through the hardest of times and our profitability will surely stabilize in the future", explains Wojciech Rembikowski, Vice-president of the Management Board of Impel S.A.

Impel Group is still looking for opportunities for further development, strengthening the role of business processes and IT in services offered. Digital Services & Business Process Outsourcing, launched in 2016, consists of all specialised high profitability services non dependent on labour cost regulations.

"Results of Digital Services & Business Process Outsourcing are promising as far as IT services are concerned. We promote e-commerce solutions which facilitate communication with clients and recognises their needs. Thanks to Hybris, the client has all necessary data in one place. In this way, the client boosts sales of own products. Client support, monitoring of their needs, implementation of services ordered, looking for new sales opportunities - all those processes are implemented with IT tools. Analysis of collected data concerning the clients and their needs is the future of every business. "By our own IT resources, including such functions as application development and SAP Competency Centre, we want to be the first company developing Facility Management or Industrial Services solutions for clients", argues Wojciech Rembikowski, Vice-president of the Management Board of Impel S.A.

The industry is changing, but price war between competitors with increasing remuneration expectations and constantly modified legal context is still visible. We resigned from many contracts which became unprofitable. New sales in cleaning services, which were hugely impacted by amended legislation, are also promising (contracts gained with Bank PKO BP, Getin Noble Bank, Open Finance), which is a good sign for the future. The Group decided to clean up internal processes which will strengthen external activities and contribute to sustainable growth of the company.

"Strengthening of commercial area must be based on internal changes. One of these changes consists of effective capital management. Our efforts focus on increasing efficiency by signing contracts with shorter payment term and efficient recovery procedures. We look at every penny spent, and current and new contracts are carefully assessed for their economic effectiveness and financial liquidity. Only coherent external and internal activities will allow Impel Group to develop and create a new face of services in Poland", highlights Grzegorz Dzik, President of the Management Board of Impel S.A.