2019 FIRST-HALF RESULTS (January 1, 2019 June 30, 2019 ) July 25, - - PowerPoint PPT Presentation

2019 FIRST-HALF RESULTS

(January 1, 2019 – June 30, 2019)

July 25, 2019

The financial statements for the six months ended June 30, 2018 and June 30, 2019 have been subject to a review by the auditors. The accounting policies applied in the condensed consolidated interim financial statements as of June 30, 2019 are the same as those at June 30, 2018, with the exception of IFRS 16 concerning lease accounting which has been applied from January 1, 2019. As the group has elected to apply IFRS 16 using the modified retrospective approach, the 2018 comparative amounts have not been restated. Under IFRS 16, all lease contracts are now recognized on the statement of financial position, measured by discounting the future contractual lease payments to present value. This results in the recognition of a new specific non-current asset and financial liabilities. The “right-of-use” asset is depreciated on a straight-line basis over the expected lease term; the lease liability is increased by the interest expense of the period and reduced by the amount of lease payments. 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

• f our Registration Document, available at www.teleperformance.com. Teleperformance

undertakes no obligation to publicly update or revise any of these forward-looking statements.

2

DISCLAIMER

CONTENTS

• 1. 2019 FIRST-HALF KEY FIGURES AND FACTS
• 2. 2019 FIRST-HALF RESULTS
• 3. 2019 OUTLOOK
• 4. APPENDICES

3

1

2019 FIRST-HALF KEY FIGURES AND FACTS

2019 FIRST-HALF KEY FIGURES AND FACTS

Key figures: sustained growth in results

2,070 2,564 H1 2018 H1 2019 246 327* H1 2018 H1 2019 156 172 H1 2018 H1 2019 2.10 2.49* H1 2018 H1 2019

▪ Solid revenue growth in H1 2019: + 23.9% on a reported basis and + 10.4% lfl, with an acceleration in Q2 (+10.9% lfl) ▪ Increase in EBITA margin to 12.8% vs. 11.9% in H1 2018*

Revenue (€ M) EBITA (€ M) Net Free Cash Flow (€ M) Diluted Earnings Per Share (€)

5

▪ Diluted Earnings Per Share up + 18.6% vs. H1 2018* ▪ Maintaining strong generation

• f net free cash flow

* Impact from the implementation of IFRS 16 as of January 1, 2019: + €11M on EBITA, + 50 bps on EBITA margin and €(0.10) on diluted earnings per share

+ 10.4% lfl 11.9% 12.8%

% of revenue

+ 18.6%

2019 FIRST-HALF KEY FIGURES AND FACTS

Key facts: execution of the strategy

6

▪ Confirming Teleperformance’s unique worldwide leadership in its market with a continued increase in its operational footprint, with 12,600 new workstations opened in H1, notably in: ▪ First-time consolidation of ex-Intelenet activities in H1 2019 ▪ Worldwide deployment of D.I.B.S. digital solutions at a good pace, now representing 20% of Teleperformance’s revenue ▪ Continued “digitalization” of the Teleperformance client portfolio, with “E-clients” now representing 22% of Group revenue ▪ New accounts disclosure from January 1, 2019:

▪ New presentation by linguistic region following the acquisition of ex-Intelenet activities in 2018 ▪ First-time implementation of IFRS 16 in H1 consolidated accounts ▪ For new sites

▪ USA ▪ Columbia and Portugal ▪ Greece and Turkey ▪ India

▪ For expanded sites

▪ USA ▪ Brazil, Dominican Republic, Mexico ▪ Tunisia, Russia, Egypt, Bosnia, Turkey ▪ India

2

2019 FIRST-HALF RESULTS

2019 FIRST-HALF RESULTS

P&L summary

8

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

H1 2018 H1 2019

€/$ exchange rate (12 months average) €1 = US$1.22 €1 = US$1.13

Revenue 2,070 2,564

Reported growth + 23.9% Like-for-like growth* + 10.4%

EBITDA before non-recurring items* 323 505

% of revenue 15.6% 19.7%

EBITA before non-recurring items* 246 327

% of revenue 11.9% 12.8%

Operating profit (EBIT) 190 255 Net profit - Group share 123 145 Diluted earnings per share (€)* 2.10 2.49

€ millions

12/31/2018 06/30/2019

€/$ exchange rate (closing) €1 = US$1.15 €1 = US$1.14

Net financial debt 2,101 2,775

IFRS 16: New lease standard effective as of January 1, 2019 The Group rarely owns its premises: most of its 400+ contact centers are held on operating

• leases. All premises leases have been restated:

▪ Right-of-use asset recognised in the balance sheet and depreciated over the lease term ▪ Lease expenses split between interest and debt repayment

H1 2019 impacts from the implementation of IFRS 16:

+ €96M + €11M + 50 bps + €11M €(7)M €(0.10) + €688M

2019 FIRST-HALF RESULTS

Revenue growth analysis

9

▪ Revenue growth: + 23.9% as reported and + 10.4% like-for-like ▪ Change in scope: consolidation of Intelenet since October 2018 ▪ Positive foreign exchange impact mainly from the strengthening of the US dollar against the euro

+ 10.4% lfl 2,070 2,118 2,564 48 +220 +226

H1 2018 Currency effet H1 2018 at constant exchange rates Like-for-like growth Change in scope H1 2019

47% 9% 14% 5% 4% 4% 3% 2% 2%

2019 FIRST-HALF RESULTS

Revenue growth by industry vertical

10

Expertise in many industries

% Revenue by vertical – details H1 2019 vs. 2013

Telecommunications (Pay-TV and Telecom

• Internet)

Financial Services Technology, Consumer Electronics Healthcare, Insurance Retail, e-Commerce Public Sector Travel Agencies, Hotels, Airlines Transportation & Logistics Media & Entertainment

6% 11% 7% 7% 18% 13% 14% 5%

▪ Ongoing diversification over time ▪ Increased contribution of business with e-player clients

Other

10% 15% 4%

11

The Digital Economy: a powerful growth engine for Teleperformance

2019 FIRST-HALF RESULTS

Revenue growth by industry vertical

% revenue generated with pure e-clients among Top 150 clients

2018 2013 19% 5% 81% 95%

+ 14 ppt

Teleperformance revenue generation with e-clients

(2013-2019 - %)

22% 78% H1 2019

+ 3 ppt

2019 FIRST-HALF RESULTS

Revenue by activity

12

▪ Core Services like-for-like growth in H1: + 11.4%, driven by Ibero-LATAM and CEMEA and acceleration in EWAP ▪ Specialized Services H1 like-for-like growth: + 5.0%, back to normative growth with acceleration in Q2

* At constant exchange rates and scope of consolidation

H1 Q2 H1 Q2 Core Services & D.I.B.S. 2,221 1,115 1,761 884 + 11.4% + 11.8% + 26.1% + 26.2%

• English-speaking & Asia-Pacific (EWAP)

801 401 695 345 + 4.4% + 6.1% + 15.3% + 16.1%

• Ibero-LATAM

645 329 563 288 + 16.1% + 16.2% + 14.6% +14.3%

• Continental Europe & MEA (CEMEA)

519 257 454 225 + 14.5% + 13.8% + 14.3% + 14.1%

• India & Middle East

255 129 48 26 +32.7% + 23.7% n/m n/m Specialized Services 344 178 309 160 + 5.0% + 6.3% + 11.1% + 11.2% Total 2,564 1,293 2,070 1,044 + 10.4% + 10.9% + 23.9% + 23.9%

• /w D.I.B.S.

507 272 N/A N/A N/A N/A N/A N/A Revenue (€ M) 2019 2018 Change (%) H1 Q2 H1 Q2 Like-for-like* Reported

2019 FIRST-HALF RESULTS

Margin by activity

13

▪ Increase in margin in both activities, Core Services & D.I.B.S. and Specialized Services, including and excluding first positive impact of applying IFRS 16 in H1 2019 ▪ Increase in all regions for Core Services & D.I.B.S., except for Ibero-LATAM due to ramp-up costs related to new sites ▪ Specialized Services margin continuing to grow

* Including a + €11 million impact on EBITA and + 50 bps on EBITA margin from the implementation

• f IFRS 16 as of January 1, 2019

** Group holdings relating primarily to Core Services businesses

Core Services & D.I.B.S. 215 9.7% 151 8.6%

• English-speaking & Asia-Pacific (EWAP)

58 7.2% 43 6.2%

• Ibero-LATAM

69 10.7% 61 10.8%

• Continental Europe & MEA (CEMEA)

32 6.2% 19 4.2%

• India & Middle-East

39 15.3% 6 11.5%

• Holdings**

17

• 22
• Specialized Services

112 32.6% 95 30.7% Total 327 12.8% 246 11.9% H1 2018 € M Margin Recurring EBITA H1 2019* € M Margin

43 58

H1 2018 H1 2019

345 401 695 801

Q2 2018 Q2 2019 H1 2018 H1 2019

2019 FIRST-HALF RESULTS

Core Services – English-speaking market & Asia-Pacific (EWAP)

• LFL revenue growth accelerated sharply in Q2 to + 6.1%
• Continued recovery in North America: most dynamic segments

were e-tailing, healthcare, transportation services and logistics

• Decline in revenue in the UK, in a still uncertain economic

environment

• In Asia, growth was sustained in Malaysia with the recent
• pening of a second multilingual hub in Penang

+ 6.1% lfl

Revenue (€ M) EBITA (€ M)

6.2%

• Excluding the positive impact of applying IFRS 16, H1

2019 saw a satisfactory improvement in the margin year-on-year

• Margin supported by the ramp-up of recently signed

contracts, relating in particular to domestic business in North America and multilingual solutions in Malaysia

+ 4.4% lfl 7.2%

% of revenue

14

61 69

H1 2018 H1 2019

288 329 563 645

Q2 2018 Q2 2019 H1 2018 H1 2019

2019 FIRST-HALF RESULTS

Core Services – Ibero-LATAM

15

• Nearshore,

pan-American solutions in Mexico and Colombia were the main growth drivers, supported by financial services and logistics in Mexico and transportation services in Colombia

• Multilingual hub in Portugal continues to be an important

source of growth for the region

• Operations in Brazil progressed at a satisfactory pace

+ 16.2% lfl

Revenue (€ M) EBITA (€ M)

10.8%

• Margin remained high, but slightly lower year-on-year

excluding the impact of IFRS 16

• Slight contraction due to the cost of ramping up major

new sites, notably the new multilingual capabilities in Portugal and the new contact centers opened in Colombia and Peru

+ 16.1% lfl 10.7%

% of revenue

19 32

H1 2018 H1 2019

225 257 454 519

Q2 2018 Q2 2019 H1 2018 H1 2019

2019 FIRST-HALF RESULTS

Core Services – Continental Europe & MEA (CEMEA)

16

• Strong growth driven once again by a very solid sales

performance among multinational clients and fast- growing local market leaders

• Further

significant increase in revenue in Greece (multilingual hub), in Eastern Europe and in Turkey

• French-speaking businesses continued to perform well

thanks to the ongoing ramp-up of new contracts, primarily in the energy and utilities segments

+ 13.8% lfl

Revenue (€ M) EBITA (€ M)

4.2%

• Excluding the positive impact of applying IFRS 16 in first-

half 2019, margin improved sharply year-on-year

• Continued solid, profitable growth in business with

global and premium clients

• Ongoing

margin recovery

• f

French-speaking businesses, notably reflecting the development of nearshore solutions

+ 14.5% lfl 6.2%

% of revenue

6 39

H1 2018 H1 2019

26 129 48 255

Q2 2018 Q2 2019 H1 2018 H1 2019

2019 FIRST-HALF RESULTS

Core Services – India & Middle East

17

• Fast-paced expansion in India (TP India), particularly in the

transportation services and travel agencies segments

• Fast-paced growth of ex-Intelenet operation on a pro

forma basis, particularly in the Indian domestic market

+ 23.7% lfl

Revenue (€ M) EBITA (€ M)

11.5%

• Excluding the positive impact of applying IFRS 16 in first-

half 2019, margin improved significantly

• Profitable growth in India (TP India)
• First-time consolidation in H1 2019 of the high-value-

added ex-Intelenet operations

+ 32.7% lfl 15.3%

% of revenue

95 112

H1 2018 H1 2019

160 178 309 344

Q2 2018 Q2 2019 H1 2018 H1 2019

2019 FIRST-HALF RESULTS

Specialized Services

18

• Much faster pace of LFL growth in Q2 (+ 6.3%) than in Q1

(+ 3.7%)

• As expected, LanguageLine Solutions returned to normal

growth in the first half of 2019

• TLScontact notably picked up in Q2 thanks to satisfactory

progress in sales of value-added services in UK

+ 6.3% lfl

Revenue (€ M) EBITA (€ M)

30.7%

• Excluding the positive impact of applying IFRS 16 in first-

half 2019, margin was significantly higher than last year

• Continued healthy margins for LanguageLine Solutions
• TLScontact, which benefited fully from the development
• f value-added services on behalf of the British

government

+ 5.0% lfl 32.6%

% of revenue

2019 FIRST-HALF RESULTS

Operating profitability

▪ Increase in EBITA margin ▪ Strong increase in operating profit, in-line with the improvement in EBITA before non-recurring items

* Impact from the implementation of IFRS 16 as of January 1st, 2019: + €11M on EBITA, + 50 bps

• n EBITA margin and + €11M on operating profit (EBIT)

** Including goodwill impairment for €(2)M

19

€ M

H1 2019 H1 2018 Change Revenue 2,564 2,070 + 23.9% EBITA before non-recurring items 327* 246 + 33.3% % revenue 12.8% 11.9% Amortization of intangible assets (56)** (41) Non-recurring items (16) (15)

• Performance share plan

(11) (12)

• Others

(5) (3) Operating profit (EBIT) 255* 190 + 34.1%

2019 FIRST-HALF RESULTS

Earnings performance

▪ Higher effective tax rate reflects the contribution from ex-Intelenet activities in India ▪ Lower financial result reflects implementation of IFRS 16 (€21 million charge), while cost of debt is flat with higher debt ▪ Net profit – Group share: €145 million, up + 18.0% versus last year ▪ Diluted earnings per share: €2.49, up + 18.6% versus last year

20

* Impact from the implementation of IFRS 16 as of January 1, 2019: + €11M on operating profit (EBIT); €(7)M on net profit – Group share and €(0.10) on diluted earnings per share ** Used to calculate diluted earnings per share € M

H1 2019* H1 2018 Change Operating profit (EBIT) 255 190 + 34.1% Financial result (47) (19) Income tax (63) (48) Effective tax rate 30.1% 27.8% Minority interests

• Net profit - Group share

145 123 + 18.0% Diluted earnings per share (€) 2.49 2.10 + 18.6% Weighted average number of shares** (M) 58.5 58.9

2019 FIRST-HALF RESULTS

Cash flow

▪ Net free cash flow: €172 million, up from €156 million last year ▪ Strong improvement in cash flow from operations ▪ Controlled expansion and optimized allocation of financial resources, with a stable capex ratio: 3.9% of revenue

* After lease expenses, interest paid and taxes

21

€ M H1 2019 H1 2018 Cash flow* 286 209 Change in working capital (13) 28 Net capital expenditure (101) (81) % revenue 3.9% 3.9% Net free cash flow* 172 156

2019 FIRST-HALF RESULTS

Balance sheet summary

* Defined as: trade receivables + current income tax receivable + other current and financial assets – trade payables – current income tax – other current liabilities

22

€ M 06/30/2019 12/31/2018

€1 = US$1.14 €1 = US$1.15

Non-current assets 4,748 4,126

• /w Intangible assets

3,512 3,535 Working capital* 660 618 Total net assets 5,408 4,744 Equity 2,285 2,225 Provisions and deferred tax liabilities 348 418 Net financial debt** 2,775 2,101 Total equity and net liabilities 5,408 4,744

** Impact from the implementation of IFRS 16 as of January 1, 2019: + €688M on the net financial debt

2019 FIRST-HALF RESULTS

Financial position

* Other items include FX +26 Misc. (12) Total +14

23

▪ Solid financial structure and quick deleveraging ▪ Low average cost of gross debt: 1.7% ▪ Free cash-flow generation to bring net debt / EBITDA ratio to around 2x in 2019, excluding IFRS 16 impacts ▪ BBB- rating and stable outlook confirmed by S&P in May 2019, the highest rating in the CX market

2,101 2,087 2,775 (172) +33 +111 +14 688

Net debt as

• f

12/31/2018 Net free cash flow Financial investments Dividend Others* Net debt as

• f

06/30/2019

• excl. IFRS 16

IFRS 16 impact Net debt as

• f

06/30/2019

3

2019 OUTLOOK

2019 OUTLOOK

Increasing full-year targets

25

▪ Annual like-for-like revenue growth of at least + 8.5% ▪ An increase of at least + 20 basis points in the EBITA margin before non-recurring items* ▪ Continued strong net free cash flow

* Excluding IFRS 16 impacts

4

APPENDICES

27

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

+ 2% + 5% + 13% + 9% + 12% + 6% + 8% + 7% + 9% + 12% + 13% + 7% + 10% + 6% + 7% + 7% + 6% + 8% + 10% + 6% + 12% + 8% + 7% + 9% + 7% 10% 8% 11% 10% 11%

0% 2% 4% 6% 8% 10% 12% 14% Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

Estimated average annual market growth: + 5%*

H1 2019 REVENUE

29th straight quarter of like-for-like growth of at least + 5%

Quarterly like-for-like growth (vs. same period of prior year) since January 2012

* Source: Frost & Sullivan

NEW PRESENTATION BY REGION

Bridge between the former and current business reporting presentation

28 Former presentation by activity Entities deleted (-)

• vs. former presentation

Entities added (+)

• vs. former presentation

New presentation by activity CORE SERVICES CORE SERVICES & D.I.B.S. English World & Asia‑Pacific TP India INTELENET Philippines English World & Asia-Pacific INTELENET USA INTELENET UK Ibero-LATAM INTELENET Guatemala Ibero-LATAM Continental Europe & MEA INTELENET Poland Continental Europe & MEA INTELENET INTELENET Philippines TP India India & Middle East INTELENET USA PRAXIDIA* INTELENET UK INTELENET Guatemala INTELENET Poland SPECIALIZED SERVICES PRAXIDIA* SPECIALIZED SERVICES

* Praxidia has been grouped with Intelenet’s Knowledge Services operations, based in India

NEW PRESENTATION BY REGION

Restated breakdown of 2018 revenue by quarter and activity

29

Q1 2018 Q2 2018 H1 2018 Q3 2018 Q4 2018 H2 2018 FY 2018 Revenue (€M) CORE SERVICES & D.I.B.S.* 877 884 1,761 919 1,135 2,054 3,815

• English-speaking & Asia-Pacific (EWAP)

349 345 694 369 434 803 1,498

• Ibero-LATAM

275 288 563 285 309 594 1,157

• Continental Europe & MEA (CEMEA)

229 225 454 237 272 509 963

• India & Middle East**

23 26 49 27 121 148 197 SPECIALIZED SERVICES 149 160 309 157 160 317 626 TOTAL* 1,026 1,044 2,070 1,076 1,295 2,371 4,441 * o/w D.I.B.S. N/A N/A N/A N/A N/A N/A N/A

** ex-Intelenet activities in the Middle East

30

ALTERNATIVE PERFORMANCE MEASURES

Change in like-for-like revenue: Change in revenue at constant exchange rates and scope of consolidation = (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 Amortization): Operating profit before depreciation and amortization, depreciation of right-of-use of leased assets, amortization of intangible assets acquired as part

• f a business combination, goodwill impairment charges and non-recurring items.

EBITA before non-recurring items (Earnings before Interest, Taxes and Amortization): 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

• rdinary 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.

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