2018 First-Half Results (January 1, 2018 June 30, 2018) Video - - PowerPoint PPT Presentation

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2018 first half results
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2018 First-Half Results (January 1, 2018 June 30, 2018) Video - - PowerPoint PPT Presentation

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2018 First-Half Results (January 1, 2018 June 30, 2018) Video Webcast July 26, 2018 DISCLAIMER The financial statements for the six months ended June 30, 2017 and June 30, 2018 have been subject to a review by the auditors. All

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2018 First-Half Results

(January 1, 2018 – June 30, 2018)

Video Webcast

July 26, 2018

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▪ The financial statements for the six months ended June 30, 2017 and June 30, 2018 have been subject to a review by the auditors. ▪ All forward-looking statements reflect Teleperformance management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a detailed description of these factors and uncertainties, please refer to the “Risk Factors” section of our Registration Document, available at www.teleperformance.com. Teleperformance undertakes no obligation to publicly update or revise any of these forward-looking statements.

DISCLAIMER

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AGENDA

2018 FIRST-HALF KEY FACTS AND FIGURES 2018 OUTLOOK 2018 FIRST-HALF RESULTS 1 2 3 APPENDIX: ALTERNATIVE PERFORMANCE MEASURES 4

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2018 FIRST-HALF KEY FACTS AND FIGURES

1

4

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▪ Strong like-for-like growth in revenue: + 8.3% ▪ Impact of the unfavorable foreign exchange environment on the performance on a reported basis ▪ Increase in recurring EBITA margin:

  • 11.9% vs 11.8% in H1 2017 as reported
  • Higher increase at constant exchange rate

▪ Diluted EPS: €2.10 ▪ Net Free Cash Flow: €156M ▪ Enhancing the worldwide market leadership: more than

6,300 workstations opened in H1 2018

2018 FIRST-HALF KEY FACTS AND FIGURES

KEY FIGURES: SOLID REVENUE AND EARNINGS PERFORMANCE

% revenue

Revenue

(€ M)

Net Free Cash Flow

(€ M)

For the definition of the financial indicators mentioned in the charts and tables, please refer to the Alternative Performance Measures in the appendix

5 2,081

2,070

H1 2017 H1 2018

245

246

H1 2017 H1 2018 11.8%

Recurring EBITA

(€ M)

Diluted Earnings per share (EPS)

(€) 1.98

2.10

H1 2017 H1 2018

178

156

H1 2017 H1 2018

+ 8.3% lfl

11.9%

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SLIDE 6

2018 FIRST-HALF KEY FACTS AND FIGURES

6

TELEPERFORMANCE STRENGTHENS ITS BUSINESS AND FINANCIAL PROFILE BY ACQUIRING INTELENET (1)

Teleperformance is significantly strengthening its added-value Specialized Services business Teleperformance is reinforcing its presence in high potential markets and verticals

  • Significantly strengthening the Group’s offering and capabilities

with Intelenet’s integrated solutions:

  • Solution design with a large consulting force covering a wide range of expertise
  • Digital integration based on robot process automation (RPA) technology
  • Operational excellence, with 55,000 employees across India, the Philippines, the UAE,

Poland and Guatemala

  • Integrating experienced and successful Intelenet top management
  • In Asia, notably in India
  • Continuing to diversify its client vertical portfolio vertical portfolio

By acquiring Intelenet, a high-end business services and digital transformation solution provider:

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2018 FIRST-HALF KEY FACTS AND FIGURES

TELEPERFORMANCE STRENGTHENS ITS BUSINESS AND FINANCIAL PROFILE BY ACQUIRING INTELENET (2)

7

* With Intelenet consolidated on a 12 month proforma basis

Teleperformance is enhancing value creation for its shareholders and is well on the path to achieve its 2022 objectives

▪ Strengthening top line growth ▪ Enhancing Group EBITA margin ▪ Forecasting an accretive impact of around 10% on earnings per share excluding goodwill in 2018*

Accretive operation Teleperformance well on path to achieve 2022

  • bjectives

▪ On track with the Group’s strategic plan, with an increased contribution from the Specialized Services business, already estimated at around 20% of the Group’s revenue in 2018* ▪ Well on the path to achieve revenue of €6 billion+ and EBITA of €850+ million by 2022

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2018 FIRST-HALF KEY FACTS AND FIGURES

INTELENET ACQUISITION IS TICKING THE FIVE MAIN STRATEGIES BOXES OF THE TELEPERFORMANCE STRATEGIC PLAN

Organic growth

External growth Geography ▪ Continued expansion into BRICS and MIST countries Vertical Innovation High-value Consulting & Analytics solution Strategic acquisitions ▪ Strengthen sector expertise in high potential verticals ▪ Digital and omnichannel integration ▪ Development of a new high value-added consulting offering in the area of customer experience (Praxidia, beginning of 2018) ▪ Targeted acquisitions in high-value specialized services

8 Intelenet acquisition

    

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2018 FIRST-HALF RESULTS

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▪ Like-for-like growth and operating margin, in line with annual targets

2018 FIRST-HALF RESULTS

P&L SUMMARY

€ millions

H1 2018 H1 2017 Change

€1 = US$1.22 €1 = US$1.08

Revenue 2,070 2,081 (0.6)%

Like-for-like growth* + 8.3% + 9.9%

EBITDA before non-recurring items* 323 328 (1.5)% EBITA before non-recurring items* % of revenue 246 11.9% 245 11.8% + 0.4% Operating profit 190 191 (0.5)% Net profit - Group share 123 116 + 6.0% Diluted earnings per share (€)* 2.10 1.98 + 6.1%

* For the definition of the financial indicators mentioned in the charts and tables, please refer to the Alternative Performance Measures in the appendix

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€ M ▪ The sharply negative currency effect (translation) mainly linked to the US dollar’s decline against the euro and, to a lesser extent, the decrease in the Brazilian real and the Colombian and Argentine pesos

2018 FIRST-HALF RESULTS

REVENUE GROWTH ANALYSIS

2,081 1,911 2,070 (170) + 158 + 1

H1 2017 Currency effect H1 2017 at constant exchange rates Like-for-like growth Change in scope H1 2018

+ 8.3 %

like-for-like

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▪ 12th straight half-year of like-for-like revenue growth above market growth

2018 FIRST-HALF RESULTS

SUSTAINED LIKE-FOR-LIKE GROWTH IN REVENUE, CONFIRMING TELEPERFORMANCE’S STATUS AS A GROWTH COMPANY

Average quarterly like-for-like growth: + 8% + 5%

Half-yearly like-for-like growth (vs prior-year period ) since June 30, 2012 12 7% 8% 8% 10% 10% 8% 7% 7% 8% 10%

8%

8%

0% 2% 4% 6% 8% 10% 12%

H2 12 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 H1 18

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▪ Ongoing diversification trend by vertical in H1 2018 ▪ Strong momentum in financial services, retail, tourism and travel agencies, and consumer electronics ▪ Growing contribution of the New Economy ▪ Global accounts represent around 40% of total Group revenue

2018 FIRST-HALF RESULTS

REVENUE ANALYSIS BY VERTICAL

13 New Economy contribution* to total revenue (2017 vs 2013) Revenue by vertical* (H1 2018 vs 2013)

* Excluding LanguageLine Solutions revenues in 2017, company acquired on September 19, 2016

53% 60% 67% 72% 79% 75% 77% 47% 40% 33% 28% 21% 25% 23% FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 H1 2017 H1 2018 Others Telecom-Internet-Pay TV

New Economy* 10%/90% 3%/97%

2017 2013

* Revenue generated by pure e-players among Teleperformance’s top 50 clients

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2018 FIRST-HALF RESULTS

REVENUE AND EBITA MARGIN BY ACTIVITY

Revenue (€ M) 2018 2017 Change H1 Q2 H1 Q2 As reported Like-for-like H1 Q2 H1 Q2 Core Services

  • English-speaking market & Asia-Pacific
  • Ibero-LATAM
  • Continental Europe & MEA

1,754 740 560 454 881 369 286 225 1,752 812 534 406 851 387 264 200 + 0.1% (8.8)% + 4.7% + 12.0% + 3.5% (4.6)% + 8.6% + 12.6% + 8.7% + 0.3% + 17.1% + 14.5% + 10.6% + 1.5% + 20.4% + 15.4% Specialized Services 316 163 329 164 (4.1)% (0.6)% + 5.7% + 6.3% Total 2,070 1,044 2,081 1,015 (0.6)% + 2.8% + 8.3% + 9.9% Recurring EBITA H1 2018 H1 2017 € M Margin € M Margin Core Services

  • English-speaking market & Asia-Pacific
  • Ibero-LATAM
  • Continental Europe & MEA
  • Holdings*

152 51 60 19 22 8.7% 6.8% 10.8% 4.2%

  • 147

60 55 11 21 8.4% 7.4% 10.3% 2.7%

  • Specialized Services

94 29.6% 98 29.7% Total 246 11.9% 245 11.8% ▪ Core Services

  • Like-for-like growth in H1:

+ 8.3%

  • Increase in margin

▪ Specialized Services

  • Like-for-like growth in H1:

+ 5.7%

  • Maintaining high margin

* Group holdings relating primarily to Core Services businesses

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▪ Good performance in e-retail, fast-moving consumer goods, the energy industry and utilities, consumer electronics, as well as in the automotive industry and food services ▪ Offshore activities in the Philippines remained lackluster in favor of nearshore business in Mexico (Ibero-LATAM region) with an impact on the margin ▪ Improvement in revenue growth in the United Kingdom but the uncertain economic (Brexit) and competitive environment weighs on profitability in the industry ▪ Solid and profitable growth in Asia, driven by China and India

2018 FIRST-HALF RESULTS

CORE SERVICES – ENGLISH-SPEAKING MARKET & ASIA-PACIFIC (EWAP)

60 51

H1 2017 H1 2018 % revenue

7.4% 6.8%

Revenue

(€ M)

Recurring EBITA*

(€ M)

* Excluding holdings

15 387 369 812 740

Q2 2017 Q2 2018 H1 2017 H1 2018

+ 1.5% lfl + 0.3% lfl

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▪ Strong growth, exceeding budget forecasts, driven by very good performances in Portugal, Spain, Mexico, Brazil and Argentina ▪ Satisfactory performances in Colombia ▪ Rapid ramp-up of operations in Peru

2018 FIRST-HALF RESULTS

CORE SERVICES - IBERO-LATAM

55 60

H1 2017 H1 2018 % revenue

10.3% 10.8%

Revenue

(€ M)

Recurring EBITA*

(€ M)

▪ High margin driven by profitable growth from operations in Portugal and Mexico (offshore) ▪ Operating efficiency continued to improve steadily in Brazil, Argentina and Spain

* Excluding holdings

16 264 286 534 560

Q2 2017 Q2 2018 H1 2017 H1 2018

+ 20.4% lfl + 17.1% lfl

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▪ Solid performance in Mediterranean countries (Greece, Egypt and Turkey) as well as in Eastern Europe, mainly built up with global clients and fast-growing local market leaders ▪ Better business momentum in France starting in the 2nd quarter ▪ Sustained growth in Sweden and Germany

2018 FIRST-HALF RESULTS

CORE SERVICES - CONTINENTAL EUROPE & MEA

11 19

H1 2017 H1 2018 % revenue

2.7% 4.2%

Revenue

(€ M)

Recurring EBITA*

(€ M)

▪ Profitable growth in a number of countries in Southern and Eastern Europe ▪ Ongoing recovery in profitability in a number of countries, including France and the Nordics

* Excluding holdings

17 200 225 406 454

Q2 2017 Q2 2018 H1 2017 H1 2018

+ 15.4% lfl + 14.5% lfl

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▪ Growth in LanguageLine Solutions revenue returned to normal in the second quarter, held back by non-recurring items in the first quarter of the year ▪ Satisfactory performance in TLScontact operations led by

  • ngoing increase in visa application volumes and sales of

add-on services during the visa delivery process

2018 FIRST-HALF RESULTS

SPECIALIZED SERVICES

98 94

H1 2017 H1 2018 % revenue

29.7% 29.6%

Revenue

(€ M)

Recurring EBITA*

(€ M)

▪ High and stable profitability in Specialized Services

* Excluding holdings

18 164 163 329 316

Q2 2017 Q2 2018 H1 2017 H1 2018

+ 6.3% lfl + 5.7% lfl

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▪ Increase in recurring EBITA margin

2018 FIRST-HALF RESULTS

OPERATING PROFITABILITY

€ M

H1 2018 H1 2017 Change Revenue 2,070 2,081 (0.6)% EBITA before non-recurring items % revenue 246 11.9% 245 11.8% + 0.4% Amortization and depreciation of intangible assets Non-recurring items

  • Performance share plan
  • Others

(41) (15)

(12) (3)

(45) (8)

(8)

  • Operating profit

190 191 (0.5)% 19

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▪ Net profit - Group share: €123M, + 6.0% ▪ Diluted earnings per share: €2.10, + 6.1%

2018 FIRST-HALF RESULTS

EARNINGS PERFORMANCE

€ M

H1 2018 H1 2017 Change

Operating profit 190 191 (0.5)% Financial result (19) (25) Income tax (48) (49) Effective tax rate 27.8% 29.5%

* Used to calculate diluted earnings per share

20

Minority interest

  • (1)

Net profit - Group share 123 116 + 6.0% Diluted earnings per share (€) 2.10 1.98 + 6.1% Weighted average number of shares* (M) 58.9 58.7

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▪ Sustained generation of net free cash flow despite negative currency effect ▪ Controlled expansion and optimized allocation of financial resources

  • Capex ratio: 3.9% vs 3.3% in H1 2017
  • Inflow in working capital requirement at €28M

▪ Cash conversion ratio**: 48%

2018 FIRST-HALF RESULTS

CASH FLOW

€ millions

H1 2018 H1 2017 Cash flow* 209 224 Change in working capital requirement Net capital expenditure % revenue 28 (81) 3.9% 22 (68) 3.3% Net free cash flow* 156 178

* After interest paid ** Net free cash flow/EBITDA before non-recurring items

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▪ Net debt virtually stable given the negative currency impact ▪ S&P long-term credit rating: BBB- investment grade maintained following the announcement of the Intelenet acquisition

2018 FIRST-HALF RESULTS

FINANCIAL POSITION

1,326 1,308 (156) + 11 + 112 + 15

Net debt as of 12/31/2017 Net free cash flow Financial investments Dividend Other items* Net debt as of 06/30/2018 €M

22

€ M 06/30/2018 12/31/2017

€1 = US$1.17 €1 = US$1.20

Non-current assets

  • /w Intangible assets

Working capital** 3,133 2,641 425 3,116 2,622 433 Total net assets 3,558 3,549 Equity Provisions and deferred tax liabilities Net financial debt 1,958 292 1,308 1,922 301 1,326 Total equity and net liabilities 3,558 3,549

* Including the currency effect for €21M ** Defined as: trade receivables + current income tax receivable + other current and financial assets – trade payables – current income tax – other current liabilities

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▪ Average cost: 2.43% ▪ Average maturity: 4.3 years ▪ Diversified financing sources ▪ Well protected against rising rates

2018 FIRST-HALF RESULTS

STRONG AND DIVERSIFIED FINANCING

22% 29% 35% 14%

Bank loans USPPs EUR Bond NEU CPs*

Diversification sources as of June 30, 2018

*New European Commercial Papers **Closing expected in September 2018

23

Rate type as of June 30, 2018

78% 22%

Fixed Floating

▪ Bond issue on July 2, 2018 for the refinancing of the Intelenet acquisition**

  • €750 million
  • Annual coupon of 1.875%
  • 7 years maturity
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2018 OUTLOOK

3

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2018 OUTLOOK

GUIDANCE RAISED AND REFINED

25 ▪ Annual revenue growth objective

  • above + 7.5%, like-for-like

▪ Annual recurring EBITA margin objective

  • above 13.5%, at constant scope of consolidation

▪ Continued strong net free cash flow

Note: The Group’s alternative performance measures are defined in the appendix

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APPENDIX: ALTERNATIVE PERFORMANCE MEASURES

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Change in like-for-like revenue: Change in revenue at constant exchange rates and scope of consolidation, corresponding to current year revenue - last year revenue at current year rates - revenue from acquisitions at current year rates / last year revenue at current year rates. EBITDA before non-recurring items (Earnings before Interest, Taxes, Depreciation and Amortizations): Operating profit before depreciation & amortization, amortization of intangible assets acquired as part of a business combination, goodwill impairment charges and non-recurring items. EBITA before non-recurring items (Earnings before Interest, Taxes and Amortizations): Operating profit before amortization of intangible assets acquired as part of a business combination, goodwill impairment charges and non-recurring items. Non-recurring items: Principally comprises restructuring costs, incentive share award plan expense, costs of closure of subsidiary companies, transaction costs for the acquisition of companies, and all other expenses that are unusual by reason of their nature or amount. Net free cash flow: Cash flow generated by the business - acquisitions of intangible assets and property, plant and equipment net of disposals - financial income/expenses. Net debt: Current and non-current financial liabilities - cash and cash equivalents. Diluted earnings per share (net profit attributable to shareholders divided by the number of diluted shares and adjusted): Diluted earnings per share is determined by adjusting the net profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding by the effects of all potentially diluting ordinary shares. These include convertible bonds, stock options and incentive share awards granted to employees when the required performance conditions have been met at the end of the financial year.

APPENDIX: ALTERNATIVE PERFORMANCE MEASURES

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