Teleperformance Group Overview
Including Q1 2018 Quarterly Information DISCLAIMER
▪ The consolidated financial statements have been audited and certified.
▪ 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. AGENDA
1 TELEPERFORMANCE AT A GLANCE
2 MARKET ENVIRONMENT
3 STRATEGY AND GOVERNANCE
4 STRATEGY IN ACTION: ACQUISITION OF INTELENET
5 Q1 2018 REVENUE AND OUTLOOK
6 APPENDICES DETAILED AGENDA
1. TELEPERFORMANCE AT A GLANCE p. 5-10
Teleperformance at a glance 5-10 2. MARKET ENVIRONMENT p. 11-16
Market environment in Core Services 11-14 Market environment in Specialized Services 15-16 3. STRATEGY AND GOVERNANCE p. 17-22
Strategy 17-20 Governance 21-22 4. STRATEGY IN ACTION: ACQUISITION OF INTELENET p. 23-34
Acquisition rationale 24-25 Financial impact for Teleperformance 31-34 Intelenet business overview 26-30
5. Q1 2018 REVENUE AND FY 2018 OUTLOOK p. 35-40 Q1 2018 Revenue 35-39 FY 2018 Outlook 40
6. APPENDICES p. 41-70 Appendix 1 41-60 Appendix 2 61-70 Key differentiating factors 41-58 2017 Annual Results 61-69 Governance structure and Teleperformance shareholding 59-60 Alternative Performance Measures 70 4 1
TELEPERFORMANCE AT A GLANCE
5 TELEPERFORMANCE AT A GLANCE KEY MILESTONES OF A GROWTH STORY…
▪ Starting 40 years ago, ongoing growth story, either organically and through high profile acquisitions
First listed on the Started Acquisitions in Offshore Founded in 1978 Acquisition in Paris stock operations in the Argentina and programs in France Mexico market US Brazil launched
1978 1986 1993 1998 2002 2003 TELEPERFORMANCE #1 IN FRANCE TELEPERFORMANCE #1 IN EUROPE
Acquisition Acquisition of Acquisition of of The BeCogent (UK) Full control of Acquisition of Acquisition of LanguageLine Answer & Teledatos TLScontact Aegis USA (US) Intelenet Solutions Group (US) (Colombia)
2008 2010 2012 2014 2016 2018 TELEPERFORMANCE WORLDWIDE LEADER … STRENGTHENING ITS VERTICAL EXPERTISE AND SPECIALIZED SERVICES
6 TELEPERFORMANCE AT A GLANCE …TO BECOME THE WORLDWIDE MARKET LEADER LEVERAGING A UNIQUE GLOBAL NETWORK Teleperformance in 2017
Founded in 1978
Operations in 76 countries 223,000 Employees
Countries where TP operates 171,000/350 Workstations Contact centers
Worldwide leader with 2017 revenue of New site in Kosovo €4.2bn
▪ Nearly 12,000 workstations opened in 2017 Serving 160+ Markets ▪ New countries: Peru and Kosovo in 265 Languages New site in Peru
7 TELEPERFORMANCE AT A GLANCE …TO PROVIDE A FULL RANGE OF SERVICES IN CONSTANT EVOLUTION
▪ Mission: Teleperformance people, “all over the world, all around the clock”, helping people address their day-to-day issues, in an even more changing and complex environment
▪ A global service provider focused on the customer experience services requiring strong processes, right people and innovation capabilities to succeed
▪ From Core Services to Specialized Services: strengthening the Group profile with higher added-value services Revenue by activity in 2017 ▪ Core Services:
Core Services 85%* • Customer services • Technical support Ibero- • Client acquisition LATAM 26% EWAP • Inbound interaction activities represents 85% of Core Services revenue 39% ▪ Specialized Services:
CEMEA • Online interpreting services (LanguageLine Solutions) 15% 20% • Visa application management services (TLScontact) • Analytics and consulting solutions (Praxidia) Specialized • Accounts receivable management services (AllianceOne Receivables Management) Services 15% • Collaborative CX platform (Wibilong) • Integrated Digital Solution (Intelenet – acquisition announced on June 14th, 2018) * Core Services split by linguistic region: - EWAP English-speaking market and Asia-Pacific (the US, Canada, the UK, the Philippines, China, India, etc.) - Ibero-LATAM Latin American countries (Brazil, Mexico, Colombia, etc.), Portugal and Spain - CEMEA Continental Europe, Middle East & Africa 8 TELEPERFORMANCE AT A GLANCE A GLOBAL LEADERSHIP RECOGNIZED IN THE INDUSTRY
▪ Over the last 5 years, Teleperformance has been recognized:
26 times by Frost 5 times as a leader 5 times as the Best Place To Work Best Employer & Sullivan in Gartner Magic leader by Everest certified 26 times certified 26 times Quadrant in 8 countries in 16 countries
▪ Probably the most ever recognized company in the CX outsourcing industry
Teleperformance is also active in Corporate Social Responsability and Group’s employee voluntary contribution ”Citizen of the World” program has raised close to US$34M in cash and in kind, utilized to support the communities in which Teleperformance operates
9 TELEPERFORMANCE FINANCIAL TRACK RECORD …WITH A PROVEN FINANCIAL TRACK RECORD (2011-2017)
▪ Profitable growth story Average € M 2011 2012 2013 2014 2015 2016 2017* 2011-2017 Revenue 2,126 2,347 2,433 2,758 3,398 3,649 4,180 Group LfL growth + 3.5% + 6.9% + 7.9% + 9.9% + 7.5% + 7.4% + 9.0% + 7.4% EWAP + 6.5% + 3.2% + 8.1% + 12.5% + 4.4% + 4.5% + 1.6% + 5.8% Ibero-LATAM + 10.5% + 16.5% + 11.2% + 6.8% + 7.8% + 11.3% + 22.4% + 12.4% CEMEA (5.2)% + 2.6% + 4.6% + 9.5% + 12.8% + 9.5% + 8.1% + 6.0% Specialized Services + 10.4% Current EBITDA 268 306 325 376 492 558 720 % revenue 12.6% 13.0% 13.4% 13.6% 14.5% 15.3% 17.2% Current EBITA 181 214 226 267 351 408 556 % revenue 8.5% 9.1% 9.3% 9.7% 10.3% 11.2% 13.3% Net profit – gr. share 95 129 129 150 200 214 312 Diluted EPS (€)* 1.63 2.27 2.27 2.62 3.45 3.67 5.31 Growth + 28.3% + 39.3% + 0.0% + 15.4% + 31.7% + 6.4% + 44.7% + 23.7% Net capex 96 108 126 157 172 190 147 % revenue 4.5% 4.6% 5.2% 5.7% 5.0% 5.2% 3.5% 4.8% Net Free cash flow 88 95 64 93 202 236 324 % current EBITDA 33% 31% 20% 25% 41% 42% 45% * Data by linguistic region related to core services activity since 2017 Definition of the Alternative Performance Measures in appendix 10 2
MARKET ENVIRONMENT
11 MARKET ENVIRONMENT IN CORE SERVICES A SIZEABLE CUSTOMER EXPERIENCE (CX) MARKET WITH OUTSOURCING PENETRATION REMAINING LOW
Contact center sourcing mix* (2010-2016) $bn ▪ Growth market outlook 100% = 280-300 310-335 • Total market up ~+ 2-3 % p.a. (in $) More interactions driven by mobility revolution and new digitized activities Outsourced 22% 25% • Outsourcing market up ~+ 5% p.a. (in $)
▪ Increasing share of outsourcing • The industry has evolved from low complexity work to a broad range of services that drives the customer experience In-house 78% 75% • Outsourcing providers are gaining share globally, delivering greater value than in-house centers in a more complex and demanding environment: quality, security, digitization, omnichannel, globalization • Dynamic regions 2010 2016
* Overall contact center spend including payment collections - Source: Everest (2017) 12 MARKET ENVIRONMENT IN CORE SERVICES A SIZEABLE MARKET WITH COMPELLING MID-TERM MARKET GROWTH
▪ Global outsourced customer experience (CX) market size in 2017: 72bn US dollars*
▪ North America is the largest market, with 42% of the volumes
▪ The fastest growing markets are LATAM nearshore for North America, and Asia-Pacific offshore and domestic
Global outsourced CX market* 2017 Global outsourced CX market – (2017-2020) Breakdown by region* (%) $bn CAGR North Regions 2017 – 2020 5.3% 4.7% 4.9% 4.9% America 42% 90 5,00% North America 3.1% 82.6 APAC offshore North America (NA) dom. + 1.8% 78.8 (dom.) 80 75.1 3,00% LATAM nearshore for NA + 7.1% 71.7 16% 68.1 22% 70 66.1 1,00% APAC offshore for NA + 7.0% Total NA + 4.4% 60 -1,00% LATAM offshore 50 -3,00% 4% APAC LATAM dom. + 4.5% 40 -5,00% 22% Asia-Pacific dom. + 6.0% LATAM EMEA + 4.6% 30 -7,00% 11% 2015 2016 2017e 2018e 2019e 2020e Total outsourced market + 4.8% EMEA Annual growth 25%
* Excluding payment collections - Source: Frost & Sullivan (2017) 13 MARKET ENVIRONMENT IN CORE SERVICES COMPETITIVE ENVIRONMENT
▪ Worldwide leader in its core services market with a unique global positioning, as more diversified than competitors ▪ A still fragmented market, with Teleperformance market share at 6%, being consolidated by its leaders ▪ Enlarged competitive environment resulting from the evolution of Teleperformance business mix profile
Top direct competitors in contact centers outsourcing – Ranking by number of countries - footprint* ranking by revenue in 2017* (2017) ($m) # Market players Countries 4 000 1 Teleperformance 76 2 Convergys 33 3 Webhelp 28 2 000 4 Arvato CRM 27 5 Concentrix 25 6 Acticall Sitel 24 7 TTEC (Teletech) 23 - 8 Transcom 20 8 Sykes 20 9 Sutherland 19 10 Alorica 16
* Based on company’s press release and publications 14 MARKET ENVIRONMENT IN SPECIALIZED SERVICES EVOLUTION OF THE COMPETITIVE ENVIRONMENT ▪ Competitive environment enlarged to Consulting, BPM and IT services
Worldwide footprint Global players in Consulting and Strategy
Customer Experience Management Accenture
Teleperformance Cap Gemini With Intelenet acquisition Alorica/EGS Convergys Atento Arvato Sitel/Acticall Cognizant Concentrix Sykes TTEC (Teletech) Genpact Wipro Webhelp Konecta Transcom Tata Consulting Services (TCS)
Revenues BPO companies based in India, IT service suppliers
15 MARKET ENVIRONMENT IN SPECIALIZED SERVICES FAST GROWING NICHE MARKETS
▪ LanguageLine Solutions is the leader of over-the-phone and video interpreting solutions in North America with a market share of 60%
▪ TLSContact is a major player in the global outsourced visa application management market (40 millions visa applications)
Increase in the number of non-English speakers* in World visa application Market share of the main players in the US over-the-phone interpreting market management market outsourcing global markets of visa application (2012-2018e) the USA rate in 2016 – in %* management in 2017 – in %*
Annual growth rate 63.2 67.3 20.1% 31% 30% 47.0 21.1% C. €900M 17.9% C. €700M 31.8 23.1 13.8% 60% C. €500M c.9% c.12% 11.0% 69% 10%
2012 2015 2018e 1980 1990 2000 2014 2020 Outsourcing In-house VFS TLScontact Others
*LEP (Limited English Proficiency) * In terms of visa application number Source: Common Sense Advisory, Steer Partners; U.S. National Population and LanguageLine Solutions estimates Source: D&B Visa Application Outsourcing report (2013) and Group estimates 16 3
STRATEGY AND GOVERNANCE
17 STRATEGY AND GOVERNANCE CONFIRMATION OF THE 2022 FINANCIAL OBJECTIVES AND NOMINATION AT THE BOARD OF DIRECTORS
▪ Confirmation of the 5 year strategic plan and 2022 financial objectives
• Revenue > 6 bn euros
• Like for like growth > + 6% CAGR
• EBITA + 850 million euros
• > 20% of revenue from Specialized Services
• Ongoing M&A strategy focused on Specialized Services (bringing additional revenue of c.500 millions euros)
18 STRATEGY AND GOVERNANCE THE KEY DIFFERENTIATING FACTORS
Worldwide leader in outsourced customer ▪ Guarantying strong delivery and sustainability for experience management for the last 10 years multinational companies
▪ Unique geographic footprint 350 sites in 76 countries
▪ Supported by world class, global "Subject Matter Experts" Diversified vertical client base sharing worldwide best practices and bringing value-added solutions
Consistency across geographies ▪ Documented, standardized and audited operational
procedures around the world Strategic assets Strategic Integrated omnichannel solutions ▪ Providing a seamless customer experience with TP Client, a Differentiating factors Differentiating proprietary integrated omnichannel CRM solution
Worldwide leader in data security protection ▪ Awarded for Innovation in Security and Privacy by (culture, process and tools) International Association of Privacy Professionals (IAPP) ▪ Certified with the Binding Certification Rules (BCR) by the CNIL
Rated BBB-/ Investment Grade by S&P ▪ The highest credit rating in the industry
19 STRATEGY AND GOVERNANCE 2018-2022 STRATEGIC DEVELOPMENT PLAN: THE FIVE MAIN STRATEGIES
▪ Continued expansion into: Geography • BRICS ( Brazil, Russia, India, China and South Africa) • MIST (Mexico, Indonesia, South Korea and Turkey)
▪ Strengthen sector expertise in high potential verticals, including: Vertical • IT, retail, financial services and IoT
▪ Digital and omnichannel integration aiming at: • More efficient management of client interactions, with the gradual integration of Artificial Intelligence into the Innovation Group’s omnichannel solutions
• Strengthening Group’s positioning in the collaborative economy and marketing platforms (Wibilong acquisition) Organic growth Organic
▪ Launch of Praxidia in 2018, a new high value-added consulting offering High-value in the area of customer experience based on: Consulting & • Group’s unique knowledge of companies’ grassroots customer experience requirements, all over the world Analytics solution • Group’s expertise in over twenty key sectors, state-of-the-art R&D facilities (CX Lab) and data analytics solutions (CXO*) (Teleperformance Analytics).
Strategic ▪ Targeted acquisitions in high-value specialized services
acquisitions
growth External External
* Customer Experience Optimizer 20 STRATEGY AND GOVERNANCE RECENT CHANGE IN THE GOVERNANCE OF TELEPERFORMANCE
▪ Back to a leaner organization with single leadership • Decided by the Board of Directors following the reassessment of the Group’s governance structure during summer 2017
• Daniel Julien unanimously appointed by the board as Chairman and CEO with the mission to implement the 2018-2022 Strategic Plan…
• …with the support of a new pack of strong top managers, members of the new Comex
• Olivier Rigaudy unanimously appointed by the Board of Directors as Deputy CEO, in charge of Finance
▪ Strengthened Board of Directors • Patrick Thomas nominated as a Lead Independent Director, ratified by the Annual General Meting held on April 20, 2018
21 STARTEGY AND GOVERNANCE LEANER AND MORE AGILE ORGANIZATION CHART: THE NEW COMEX
▪ “Melting pot” of origins and cultures: United States / Continental Europe / Asia / South America ▪ Average age: 53.5 ▪ Average seniority with the Group: 15 years
Daniel Julien Chairman and CEO
Leigh Ryan Olivier Rigaudy Chief Legal and Deputy CEO Compliance Officer in charge of Finance
Alan Truitt Jeffrey Balagna João Cardoso Chief Business Chief Operating Chief R&D and Digital Daniel Julien Development Officer Officer Integration Officer
Brian Johnson* Agustin Grisanti Specialized Services Yannis Tourcomanis David Rizzo** Ibero-LATAM CEMEA President EWAP co-Presidents President Core Services
* President of the English-speaking market (Canada, Guyana, India, Ireland, Jamaica, Philippines, South Africa, United Kingdom, United States) ** President of the Asia-Pacific region (Australia, China, Indonesia, Malaysia, Singapore) 22 4
STRATEGY IN ACTION: ACQUISITION OF INTELENET
23 ACQUISITION RATIONALE TELEPERFORMANCE STRENGTHENS ITS BUSINESS AND FINANCIAL PROFILE BY ACQUIRING INTELENET (1)
▪ Teleperformance is significantly strengthening its added-value Specialized Services business, by acquiring Intelenet, a high-end business services and digital transformation solution provider.
1. Significantly strengthening the Group’s offering and capabilities with Intelenet’s integrated solutions: • Solution design created by a large consulting force with a wide range of expertise • Digital integration based on robot process automation (RPA) technology • Operational excellence, with 55,000 employees working in 40+ locations across India, the Philippines, the UAE, Poland and Guatemala
2. Integrating experienced and successful Intelenet top management, sharing the same values and strategic vision as Teleperformance
▪ Teleperformance is reinforcing its presence in regions with strong growth potential, in India notably, and continuing to diversify it client vertical portfolio
24 ACQUISITION RATIONALE TELEPERFORMANCE STRENGTHENS ITS BUSINESS AND FINANCIAL PROFILE BY ACQUIRING INTELENET (2)
▪ Teleperformance is enhancing value creation for its shareholders and is well on the path to achieve its 2022 objectives
1. Accretive operation • Strengthening top line growth, with Intelenet benefiting from strongly positive momentum • Enhancing Group EBITA margin and cash conversion rate • Forecasting an accretive impact of around 10% on earnings per share excluding goodwill in 2018*
2. Teleperformance well on path to achieve 2022 objectives • 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* • After the transaction, Teleperformance will be well on the path to achieve revenue of €6 billion+ and EBITA of €850+ million by 2022
* With Intelenet consolidated on a 12 month proforma basis 25 INTELENET BUSINESS OVERVIEW A GLOBAL, EXPERT AND DIVERSIFIED BUSINESS MODEL
Founded in 2000 and based in Mumbai
A leading global provider of high-end business services in a growing industry
Annual revenue: US$449 million* EBITDA margin: 18.5%* Positive momentum
55,000 employees Snapshot Revenue breakdown by Revenue breakdown by Revenue breakdown by client geography (2019B) service type (2019B) client vertical (2019B)
APAC & Other Middle East Finance & 2% International Other, incl. Retail and Manufacturing Intelenet 9% Accounting, Other Worldwide footprint: 8 countries business clients* 10% 12% 67% Human Industry - Specific Healthcare Resources Integrated 6% Europe incl. BFSI* Outsourcing Services UK United Public sector 45% 9% 47% 21% States 10% 4 main service types provided in 25 languages 35% Customer Telecom, Media India** Management & Technology 33% Services 10% 34% Travel, Transp. & Hospitality 18% 140+ clients in 6 main client verticals * global clients with delivery centers in India (offshore), the Philippines (offshore), Europe, the Middle East, and the Americas **India-in-country business segment (all customers in India, all delivery in India) * As of March 31, 2018 26 INTELENET BUSINESS OVERVIEW A COMPREHENSIVE SUITE OF BPM SOLUTIONS TO CREATE FURTHER VALUE FOR CLIENTS
2 vertical examples: Healthcare: transaction processing related to Revenue Transaction Cycle Management in the US healthcare system Processing Vertical Financial services: transaction processing related to ▪ Creating further value for the client product underwriting 1. Helping blue chip clients Human Resources Workforce administration service outsourcing • Drive revenue growth Outsourcing Payroll services outsourcing • Deliver operating efficiencies Claims processing for travel Finance & • Reduce cost of operations Risk management Accounting Procure to pay (vendor payment processing) • Increase customer satisfaction Services Core Business Core services Order to cash (client order processing)
2. With a global delivery approach combining Customer E-services Management Social media • Operational excellence Services Contact center
• Process automation Analytics services Consulting/ Guidance on operational services • Consulting capabilities Knowledge Services
Process optimization
Gen Gen - Robotics solutions
Next Digital capabilities Artificial intelligence Offerings Machine learnings 27 INTELENET BUSINESS OVERVIEW CORE VALUE PROPOSITION TO CLIENTS
Value Drivers – Technology, Analytics and Cost Benefit Potential Process Consulting (TAPTM) • Solutions driven by Technology and Knowledge Services (Analytics, Consulting) to deliver additional value to the client • Agile and responsive to client needs in a dynamic environment 5- 10- 25- • Track record of delivering excellence and long-term relationships 100 5% 10% 15% 40% Professionals • Dedicated team of ~200 Proven track with strong digitization experts record of analytics • Innovation capabilities developing best- to 100) to expertise and • Robust technology enablers in-class Business Six Sigma Intelligence and background Management
Indexed coupled with Information excellent solutions plus
Cost business tools & 40 – 60% acumen technology in
Analytics
Current ( Operating Process Labor cost Technology Automation rigor optimisation arbitrage Process Analytics Consulting Operational Analytical Tech Tools Excellence Consulting 28 INTELENET BUSINESS OVERVIEW CASE STUDIES
IN BANKING IN TRAVEL, TRANSPORT. & HOSPITALITY Objective: Objective:
The client wanted to set up a mortgage processing unit The client was looking for a BPM provider to move critical from an offshore location customer operations offshore, including scheduling changes, exchanges, refunds and duplicate bookings. Intelenet solution The client was also looking for reduced costs and increased efficiency through automation ▪ Business process consultants and experts setting an action plan to build a new organization from scratch in terms of process and Intelenet solution technology ▪ Six Sigma and lean initiatives deployed to increase efficiency and ensure process standardization ▪ Continuous improvement framework was designed and deployed ▪ AI-based automation tools were deployed, notably to calculate – workforce was trained on Lean Six Sigma fares, refunds and cancellation fees; workflow tool introduced to eliminate errors due to missed deadlines and automate airline ▪ Technology, Analytics & Process optimization teams were and hotel promotion pricing, eliminating manual effort deployed to identify opportunities and drive project execution Examples of results Examples of results ▪ Cost savings driven by better utilization of FTE ▪ Reduced processing time ▪ Fewer missed deadlines ▪ Reduced mortgage offer cycle from 11 days to 48 hours
29 INTELENET BUSINESS OVERVIEW INTELENET ACQUISITION CASE
▪ Strengthening Teleperformance’s profile & assets and materializing the Group’s long-term strategy
1. A global leader in business services and digital transformation solutions, with deep domain knowledge, including automation, a best-in-class operational framework and a comprehensive range of service offerings to meet client needs
2. Highly skilled team with 200+ data scientists, process champions, and business consultants providing high-end services
3. Market leading position across diversified industry verticals
4. Strong, balanced client portfolio with high average relationship tenure and contract renewal rates
5. The fastest growing company in the industry with best-in-class margins and a strong cash flow profile
6. A stable, proven and experienced leadership team, which has successfully led the firm through its development since 2000
➢ Intelenet’s complementary differentiating assets to enhance Teleperformance’s market and client partnership positioning, as well as its client stickiness and thus growth sustainability and profitability
30 FINANCIAL IMPACT FOR TELEPERFORMANCE INTELENET FINANCIAL PROFILE
▪ Growth and margin improvement (2015-2018)
FY15 FY16 FY17 FY18 (ended March 31, 2015) (ended March 31, 2016) (ended March 31, 2017) (ended March 31, 2018)
Revenue (US$m) 364 422 414* 449
EBITDA 55 61 72 83
EBITDA margin 15.1% 14.5% 17.4% 18.5%
* termination of non-profitable contracts in the UK
31 FINANCIAL IMPACT FOR TELEPERFORMANCE FINANCIAL PROFILE AND OUTLOOK BY BUSINESS
FY 2018 Normative annual Revenue (US$m) Revenue breakdown by business (ended March 31, 2018) growth
Core Services Core Services (India) 150 + 10% / + 12% (India) 33% Specialized Services 299 + 10% / + 12%
Total 449 + 10% / + 12% Specialized Services 67% FY 2018 EBITDA (ended March 31, 2018) Margin objective EBITDA breakdown by business (US$m) Margin Core Services Core Services (India) 12 8.0% 8% / 10% (India) 15% Specialized Services 71 23.5% ~25% Total 83 18.5% ~20% Specialized Services Strong growth and profitability momentum 85% No synergies factored in
32 FINANCIAL IMPACT FOR TELEPERFORMANCE ACCRETIVE IMPACT
TELEPERFORMANCE Acquisition impact on INTELENET 2018 OBJECTIVES TELEPERFORMANCE Annual like-for-like growth ≥+ 6% + 10% / + 12% > + 1%
EBITDA margin - ≈20% + 20 bps
EBITA margin ≥13.5% ≈15% + 20 bps
Cash conversion rate* - >55%
Earnings per share** ≈+ 10%
* EBITDA/net free cash flow before interest paid ** 2018 proforma, before amortization of goodwill Accretive impact – No synergies factored in Positive impact on the Group’s initial financial annual objectives for 2018
33 FINANCIAL IMPACT FOR TELEPERFORMANCE KEY TRANSACTION DATA AND FINANCING
▪ Key transaction data 1. Enterprise value: US$1.0 billion
2. Fully financed through debt
3. Transaction expected to close by September 30, 2018, subject to receipt of certain regulatory approvals and other customary closing conditions
▪ Teleperformance financial structure and cash flow generative profile 1. The leverage ratio (net debt/EBITDA) should be below 2.5 on a proforma basis at end-2018
2. Expected to revert to below 1 by 2021
3. Financial profile of the acquisition will strengthen the Group’s ability to generate strong cash flow to reduce debt quickly and/or finance future growth
34 5
Q1 2018 REVENUE AND FY 2018 OUTLOOK
35 Q1 2018 REVENUE SUSTAINED GROWTH
▪ The Group continued to enjoy a strong growth dynamic, despite the high basis of comparison in first-quarter 2017 ▪ Revenue was up + 6.7% like-for-like
% change € millions Q1 2018 Q1 2017 As reported Like-for-like* €1 = US$1.24 €1 = US$1.06
Revenue 1,026 1,066 - 3.8% + 6.7%
* The Group’s alternative performance measures are defined in the appendix 36 Q1 2018 REVENUE REVENUE GROWTH ANALYSIS
▪ The negative currency effect (translation) mainly reflects the decline in the US dollar and, to a lesser extent, in the Brazilian real and the Colombian peso, against the euro
€m 1,066 + 64 1,026 961 - 105
+ 6.7% like-for-like
Q1 2017 Currency effect Q1 2017 at constant Like-for-like growth Q1 2018 exchange rates
37 Q1 2018 REVENUE SUSTAINED LIKE-FOR-LIKE REVENUE GROWTH, CONFIRMING TELEPERFORMANCE’S STATUS AS A GROWTH COMPANY
▪ 24th 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
14% + 13% + 13% + 12% 12% + 12% + 12% Average quarterly + 10% 10% + 10% like-for-like growth: + 9% + 8% + 8% + 9% + 8% + 9% 8% + 7% + 7% + 8% + 7% + 6% Estimated average + 7% + 7% 6% + 7% annual market + 6% + 6% + 6% growth: + 5% + 5%* 4%
2% + 2%
0% 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
* Source: Frost & Sullivan 38 Q1 2018 REVENUE
▪ Core Services Q1 revenue growth by activity and linguistic region (€m) • English-speaking market & Asia-Pacific 901 874 – Strong business momentum in the e-tailing, consumer electronics, fast-moving CEMEA consumer goods, automotive and utilities segments CEMEA 206 229 – Weaker performance in the telecommunications segment, especially in the Philippines Ibero- + 7.0% Ibero- – Good pace of growth in Asia LATAM LATAM 271 like-for-like – Stable business volumes in the United Kingdom 274 + 5.0% like-for-like EWAP EWAP 165 152 • Ibero-LATAM 425 371 – Strong growth, despite a particularly high basis of comparison in Q1 2017 – A very good start to the year in Portugal (multilingual hubs) and Spain Q1 2017 Q1 2018 Q1 2017 Q1 2018 Core Services Specialized Services – Healthy growth in Mexico – Rapid ramp-up of operations in Peru
% change • Continental Europe and MEA
As reported Like-for-like – Dynamic growth in revenue from global clients in Eastern Europe, Greece, Egypt and Turkey Core Services - 3.1% + 7.0% – Good pace of growth restored in Germany, thanks in particular to the contribution of the new site in Kosovo serving the German market, in Sweden and, to a lesser extent, - English-speaking market & Asia-Pacific - 12.7% - 1.0% in France - Ibero-LATAM + 1.0% + 13.8% ▪ - Continental Europe & MEA + 11.4% + 13.6% Specialized Services – Solid performance by TLScontact, reflecting a satisfactory increase in transaction Specialized Services - 7.7% + 5.0% volumes and sales of add-on services Total - 3.8% + 6.7% – Temporary slowdown in LanguageLine Solutions’ revenue growth, due to negative calendar effects and a technical incident (rapidly resolved) that adversely affected the volume of billed services 39 2018 GUIDANCE CONFIRMED FURTHER PROFITABLE GROWTH AND POSITIVE CASH GENERATION
▪ Annual revenue growth objective • more than + 6%, like-for-like
▪ Annual recurring EBITA margin objective • at least 13.5%
▪ Continued strong net free cash flow
Note: The Group’s alternative performance measures are defined in the appendix 40 6
APPENDIX 1 Key Differentiating Factors Governance Structure Teleperformance Shareholding
41 KEY DIFFERENTIATING FACTORS STRONG DIVERSIFIED AND MORE DIGITIZED VERTICALS
TELECOMMUNICATION IT & IoT RETAIL & FINANCIAL INSURANCE UTILITIES TRAVEL & AUTOMOTIVE GOVERNMENT E-RETAIL SERVICES ACCOMODATION
Change in the revenue* breakdown by vertical New Economy contribution* to total revenue (2017 vs 2013) (2017 vs 2013) Telecommunications: 21%
35% New Economy* 2013 2017 30%
25%
20% 16% 14% 14% 14% 15% 12% 10%/90% 10% 7% 7% 6% 7% 3%/97% 5% 3%
0% 2017 2013
* Excluding LanguageLine Solutions revenues in 2017, company acquired on September 19, 2016 * Revenue generated by pure e-players among Teleperformance’s top 50 clients 42 KEY DIFFERENTIATING FACTORS A STRONG AND DIVERSIFIED CLIENT BASE
▪ Multi-year trend of lower revenue concentration
▪ Increased contribution from global accounts
Client portfolio concentration* % of revenue (2007-2017) • Increasingly diverse client base, now more than 850 clients*
• Average tenure of client relationship (Top 50) 80% is 10 - 12 years 70% 60% • Lower concentration caused notably by 50% 70% diversification in new verticals, with recent 40% 68% significant accounts gained in the New 30% 38% 63% 61% 20% 34% Economy in particular 10% 31% 30% 10% 7% 8% 0% 6% • Global accounts represent nearly 40% of total Top1 Top10 Top 50 Group revenue 2007 2013 2015 2017
In 2017 - Top20: 43% Top100: 75%
* Excluding LanguageLine Solutions revenues in 2017, company acquired on September 19, 2016 43 KEY DIFFERENTIATING FACTORS CORE SERVICES: STRONG GROUP GEOGRAPHICAL AND SOURCING MIX
▪ A geographical mix reflecting Teleperformance worldwide footprint
▪ Continued increase in offshore revenue contribution, now representing 40 % vs 35 % in 2015
Core Services revenue by region (2017) Core services revenue by sourcing (2015-2017)
65% 62% 60% 31%
45%
38% 40% 35%
24% 2015 2016 2017 EWAP CEMEA Ibero-LATAM Nearshore/offshore Domestic * Split of the core services revenue in 2016 and 2017
44 KEY DIFFERENTIATING FACTORS CORE SERVICES: A UNIQUE OFFERING OF WORLDWIDE DOMESTIC/NEARSHORE/OFFSHORE SOLUTIONS
Employees Country 2017 1 Philippines 36,086 2 United States 32,924 3 Mexico 17,658 4 Brazil 16,638 5 Colombia 15,171 6 India 12,893 7 Portugal 9,022 8 United Kingdom 8,558 9 Tunisia 6,068 10 Greece 5,965
▪ With a network of 34 offshore/nearshore locations around the world, Teleperformance is the only industry player able to offer ≈ 60% worldwide integrated Domestic, Nearshore & Offshore solutions of the total Group employees
45 KEY DIFFERENTIATING FACTORS BECOMING A REFERENCE IN SECURITY AND DATA PRIVACY IN THE INDUSTRY
▪ IAPP (International Association of Privacy Professionnals) • Teleperformance won the prestigious global HPE-IAPP Privacy Innovation Award for the Privacy Operations category in November 2017 • This award recognizes organizations that use privacy to differentiate themselves and build customer and citizen trust • “The HPE-IAPP Privacy Innovation Awards spotlight unique programs and services in global privacy and data protection. Teleperformance has been honored as a fine example of the best our field has to offer,” said IAPP President and CEO J. Trevor Hughes.
▪ BCR (Binding Corporate Rules) • Teleperformance received European Union Binding Corporate Rules (BCRs) Approval, as both a Data Controller (Group’s employee data) and as a Data Processor (the data of Group’s clients and their customers) in February 2018 • Teleperformance is the only BPO company that has gained approval for BCRs • The BCR is a legal document and outlines the Group’s compliance, privacy and security program It is binding agreement between each subsidiary within the group • The BCR approval is one aspect of Teleperformance becoming GDPR (General Data Protection Regulation) compliant by May 2018
46 KEY DIFFERENTIATING FACTORS TELEPERFORMANCE ADDED-VALUE ANALYTICS & OPERATIONAL CONSULTING SOLUTIONS
▪ Launch of a “Field to Board Room” analytics and operational consulting company in 2018: PRAXIDIA ▪ Strengthening Teleperformance’s CX solutions offering and stickiness to the client, as a Global Customer Experience Partner ▪ Becoming a Customer Experience Optimizer ▪ Targeting the in-house CX market
EFFICIENCY
SUBJECT MATTER EXPERTS PREDICTIVE MODELS Senior consultants & ENTERPRISE FEEDBACK MANAGEMENT
CUSTOMER INSIGHTS & EXPERIENCE TRANSFORMATION
Multidisciplinary a Teleperformance company • 6 Sigma CUSTOMER SERVICE • Psychosocial ORGANIZATION • Project leaders “CX LAB” ASSESSMENTS 180,000 surveys/year Process analysts “trend analysis by FROM THE verticals” FRONT LINE “COMPLEXITY & COSTS”
47 KEY DIFFERENTIATING FACTORS ACQUISITION OF A FRENCH STARTUP, WIBILONG, THE 1ST COLLABORATIVE CUSTOMER SERVICE PLATFORM
▪ Wibilong’s mission is to organize brand and customer collaboration at every stage of the sales and after-sales process
▪ Thanks to its solution, customers become true brand collaborators, increasing sales, customer service performance and customer satisfaction while reducing costs
▪ Wibilong manages now more than 13 million customers in 15 countries for more than 30 brands and retailers in sectors like consumer goods and retail furniture, automotive, travel and tourism, telecom and insurance
48 KEY DIFFERENTIATING FACTORS THE MULTILINGUAL HUBS: SERVING THE EUROPEAN AND ASIAN MARKETS ON BEHALF OF MULTINATIONAL CLIENTS
▪ What is a multilingual hub?
• A solution that gathers native speakers from different locations in one hub to deliver the best service for Pan-European and Asian mid-size programs • A solution allowing serving 140 countries from 5 centralized locations in more than 40 languages Netherlands Greece ▪ Latest premium multilingual hub opened in Malaysia in May 2017, offering services in 25 languages Portugal
Malaysia
Egypt 49 KEY DIFFERENTIATING FACTORS CASE STUDY: MULTILINGUAL HUB IN PORTUGAL (1)
FOUNDED IN 29 7,500 6,915 8 CONTACT 85+ 1994 LANGUAGES EMPLOYEES WORKSTATIONS CENTERS CLIENTS
SECTORS CHANNELS SERVICES
Consumer CITY CENTER Electronics Retail Customer Customer Inbound Outbound Service Acquisition
Insurance Telecom
Email Technical IT Service Chat Support Gaming Travel & Desk ATLANTICO Tourism Backoffice ecommerce Financial Services Social Face-to-Face Media OCEANARIO Media Technology 50 KEY DIFFERENTIATING FACTORS CASE STUDY: MULTILINGUAL HUB IN PORTUGAL (2)
▪ What makes Lisbon the perfect location? • Well educated population • Flexible labor market • High fluency in foreign languages and high number of foreign families • Exotic tourist destination • Current and sustainable competitive cost • Lisbon airport is centrally located and well served for short and long flights • Social peace and political stability
Number of agents per foreign language
911
697 582 453 428 308 220 112 55 40 30 29 27 20
French German Brazilian Spanish Dutch Italian English Nordics Others Arabic Russian Polish Farsi Turkish
51 KEY DIFFERENTIATING FACTORS CX LAB: A UNIQUE INNOVATIVE RESEARCH CENTER
▪ Strong Research & Development resources
Teleperformance’s award-winning Customer Experience Lab (CX Lab) is a ground-breaking center devoted to research global trends in how companies interact with customers as well as consumer tendencies and preferences by country, channel, segment, and generation, generating insights and opportunities for companies to improve their customer experience strategy
52 KEY DIFFERENTIATING FACTORS CX LAB OUTPUT: UNDERSTANDING THE CUSTOMER
▪ Preferred channel to interact with customer service: “the Voice” preferred at 56%
Traditionalists Baby Boomers Generation X Millennials Generation Z Sector Avg. 56%
58% 58% 58% 55% 38%
42% 40% 38%38%38% 36% 15% 11% 9% 7% 7% 6% 17% 4% 14% 14% 14% 2% 2% 12% 12%11% 12% 11% 10% 9% 9% 9% FAVORITE 11% 7% 6% 7% 7% 6% 4% 4% 5% 6% 5% 4% 5% 3% 3% 2% 2% 4% 4% 3% 2% 1% 2% 2% 3% 2% CHANNEL 4% 4% 4% 2% 1% 0%
Voice Email / Web Chat w/ live Mobile app Social media Click-to-Call SMS Instant Automated Face-to-face Video kiosk/ form agent Messaging chat video teller/ video chat
Source: Teleperformance CX Lab This survey is based on 112,434 respondents (all countries and all sectors) who contacted customer services in 2017 (multiple answers) 53 KEY DIFFERENTIATING FACTORS TELEPERFORMANCE CLIENT CRM (“TP CLIENT”)
▪ Proprietary technology solution enabling an omnichannel experience
TP Client is an internally developed CRM tool that can help improve the efficiency and effectiveness of a client program to create, resolve, and track customer issues • TP Client manages multi-channel interactions including voice, email, contact us forms, chat and social media. • The workflow engine is a distinctive capability which tracks customer interactions across channels. and ensures consistent and seamless issue resolution. • TP Client can be integrated with internal and external systems and is easily customized for each client .
TP Client is a cornerstone technology for TeleperformanceConnection, our customer engagement mobility solution • Video Chat using WebRTC and Flash • Mobile-friendly application templates and extensions for iOS, Android and Windows Phone
Business Multi- Knowledge Customer Case Process Integration Channel Base Database Classify Workflow 54 KEY DIFFERENTIATING FACTORS COGNITIVE OMNICHANNEL
AGENT BOT INTEGRATION Plugin architecture to integrate with Chatbots TRANSFER TO REAL AGENTS We can program Teleperformance Client to transfer to a real agent if the bot does not solve customer inquiries TP Client new
SUPERVISOR BOT generation The agent can use the Chatbot to clarify questions, The cognitive omnichannel approach is the reducing the average handle time result of adding AI capabilities to TP Client INTEGRATION WITH EXTERNAL CHATS Facebook Messenger, WeChat and Artificial others using Nexmo API Intelligence HANDLE CUSTOMER TIMEOUTS to end conversations OMNICHANNEL INTEGRATION All previous interactions done by bot are logged and available for live agents ALLOW SENDING/RECEIVING TEXT, IMAGES AND VIDEO
SUPPORT OF STRUCTURED DIALOGS (visual IVR) 55 KEY DIFFERENTIATING FACTORS LANGUAGELINE SOLUTIONS: PROVIDING A COMPREHENSIVE SET OF SOLUTIONS ACROSS ALL CHANNELS AND SECTORS
Breakdown of LanguageLine Solutions revenue by language service Over-the-phone interpretation (“OPI”) provides type (2017) on-demand, quick access to highly qualified Others interpreters 24/7/365 in 240+ languages OSI 7% VRI 5% 4% Video-remote interpretation ("VRI") allows for OPI immediate face-to-face interaction through a 84% device, enhancing the experience through the addition of visual cues and body language
Onsite interpretation (“OSI"), is required for high interaction settings, such as those involving multiple participants, sensitive communications, complex dialogue exchange and / or young children Breakdown of LanguageLine Solutions revenue by client sector (2017) Others Document translation and software / systems localization utilizes experienced proven linguists, open 16% and standards-based technologies and processes Financial Services Medical 10% 44% LLS also provides solutions that ensure the qualifications of in-house interpretation personnel, along with other ancillary equipment, products and fees Government 17% Insurance 13% 56 KEY DIFFERENTIATING FACTORS LANGUAGELINE SOLUTIONS: A GLOBAL DISTRIBUTED WORKFORCE OF INTERPRETERS
Language capabilities (2017) 8,400 interpreters, o.w. 70% are Homeworkers Others 13% Russian 3% 3% Canada Arabic 3%
Dominican Asian languages European 53% USA Republic 13% languages <1% 68%
24% Mexico Legend Corporate headquarters xxx % of total interpreters Key takeaways 3% 4% 1% Panama ✓ Since 2011, LLS has had a significant shift in its interpreter workforce from Honduras Costa Rica center-based to work-at-home (WAH) Teleperformance partners ✓ Today, LLS’ interpreters are located across 10 countries Peru United Egypt Lithuania Colombia ✓ LLS’ increasing WAH interpreter base is a key strategic advantage in allowing Kingdom the company to consistently provide the lowest cost interpreter available
✓ LLS’ WAH interpreters are increasingly being digitally-enabled through the 1% <1% 3% 7% 1% company’s Olympus technology (ERP)
57 KEY DIFFERENTIATING FACTORS TLSCONTACT: A SUCCESSFUL GROWTH STORY
YESTERDAY TODAY TOMORROW
Business started in a niche market: European leader in visa application From niche market to global offering the visa application centers outsourcing ▪ Citizen services (transfer from ▪ Strong footprint: 140 locations global public budget to “user pays” ▪ 1st visa application center opened across Europe, Asia and Africa model) in Beijing for French Embassy in (+6m visa interactions annually) 2007 ▪ Leverage on Teleperformance capabilities (specifically LLS) ▪ Solid business model: ▪ Joined Teleperformance in 2010 • Online interpretation • Long-term contracts with • Interpretation travel cards governments • US market for citizen services ▪ From 4 million euros revenue in • User-pays • Healthcare 2009 to close to 150 million euros • Value added services (insurance, today, due to: travel, …) (one-stop shopping for the ▪ Assistance to refugees in UE • Leading edge technology travellers) • Call centers + face-to-face centers + • High demand from governments interpretation ▪ Visa outsourcing market has (budget cuts, appetite for attracting ▪ Leading-edge technology: tourists…) gained maturity • E-lodging • Increased needs for identity • Biometrics management (biometrics) ▪ Ensuring security (certified • Identity management ISO/IEC 27001: 2013) and quality ▪ Enhanced portfolio of high-value specialized services
58 GOVERNANCE STRUCTURE AN INTERNATIONAL AND SEASONNED MANAGEMENT AND BOARD SUPPORTING A STRONG LEADERSHIP
CORPORATE MANAGEMENT BOARD OF DIRECTORS
Leadership: Teleperformance SE Board has 14 directors, Daniel Julien – Chairman and CEO 9 of whom are independent
Daniel Julien - Chairman Executive Committee: Emily Abrera - Independent Director Olivier Rigaudy – Deputy CEO and CFO Alain Boulet - Independent Director Bernard Canetti - Director Leigh Ryan – Chief Legal and Chief Compliance Officer Philippe Dominati - Director Alan Truitt – Chief Business Development Officer Jean Guez - Director Wai Ping Leung - Independent Director Jeffrey Balagna – Chief Operating Officer Robert Paszczak - Independent Director João Cardoso – Chief R&D and Digital Integration Officer Pauline de Robert Hautequere - Independent Director
Yannis Tourcomanis – CEMEA President Leigh Ryan - Director Christobel E. Selecky - Independent Director Brian Johnson – EWAP co-President Angela Maria Sierra-Moreno - Independent Director David Rizzo – EWAP co-President Patrick Thomas - Lead-Independent Director Stephen Winningham - Independent Director Agustin Grisanti – Ibero-LATAM President
59 TELEPERFORMANCE SHAREHOLDING SHAREHOLDING STRUCTURE*: AN INTERNATIONAL CAPITAL OWNERSHIP
▪ Listed on the NYSE Euronext Paris market – floating ~100%
▪ An international shareholding structure reflecting the Group’s global footprint
United Kingdom 16% **Others include % Capital North America Institutional 30% • Daniel Julien 1.7% Others** Continental investors Europe 14% Other 86% (excl. France) • Retail investors, (Asia, South 25% incl. TP’s 8.0% Africa, etc.) employees 2%
France • Brokers 4.0% 27%
* As of March 31, 2018 60 6
APPENDIX 2 2017 Annual Results Alternative Performance Measures
61 2017 ANNUAL RESULTS P&L SUMMARY
▪ Sustained growth in results and margins
€ millions 2017 2016 Change
€1 = US$1.13 €1 = US$1.11 Revenue 4,180 3,649 + 14.6% Like-for-like growth* + 9.0% + 7.4%
EBITDA before non-recurring items* 720 558 + 29.0% % of revenue 17.2% 15.3%
EBITA before non-recurring items* 556 408 + 35.9% % of revenue 13.3% 11.2%
Operating profit 355 339 + 4.6%
Net profit - Group share 312 214 + 46.0%
Diluted earnings per share (€)* 5.31 3.67 + 44.7%
* For the definition of the financial indicators mentioned in the charts and tables, please refer to the Alternative Performance Measures section in the appendix 62 2017 ANNUAL RESULTS REVENUE AND EBITA MARGIN BY ACTIVITY
2017 2016 Change Revenue (€ M) As reported Like-for-like FY Q4 FY Q4 FY Q4 FY Q4
Core Services 3,542 929 3,314 900 + 6.9% + 3.1% + 8.8% + 8.8% - English-speaking market & Asia-Pacific 1,607 412 1,628 432 (1.3)% (4.8)% + 1.6% + 0.3% - Ibero-LATAM 1,084 284 884 255 + 22.6% + 11.3% + 22.4% + 21.9% - Continental Europe & MEA 851 233 802 213 + 6.1% + 9.4% + 8.1% + 10.7% Specialized Services 638 156 335 150 + 90.4% + 4.2% + 10.4% + 10.2% Total 4,180 1,085 3,649 1,050 + 14.6% + 3.3% + 9.0% + 9.0%
2017 2016 EBITA € M Margin € M Margin Core Services 364 10.3% 321 9.7% ▪ Core Services like-for-like growth in 2017: - English-speaking market & Asia-Pacific 141 8.8% 150 9.2% + 8.8% - Ibero-LATAM 134 12.3% 109 12.3% ▪ Specialized Services like-for-like growth in 2017: - Continental Europe & MEA 43 5.0% 31 3.8% + 10.4% - Holdings* 47 - 31 - ▪ Increase in margins in both activities Specialized Services 191 29.9% 86 25.9% Total 556 13.3% 408 11.2%
* Group holdings relating primarily to Core Services businesses 63 2017 ANNUAL RESULTS OPERATING PROFITABILITY
▪ Sustained increase in recurring EBITA margin of 210 bps
▪ Impact of the acquisition of LanguageLine Solutions on the amortization of intangible assets
€ M 2017 2016 Change
Revenue 4,180 3,649 + 14.6%
EBITA before non-recurring items 556 408 + 35.9% % revenue 13.3% 11.2%
Amortization and depreciation of intangible assets (154)* (41) Non-recurring items (47) (28) - Performance share plan (24) (22) - Others (23) (6)
Operating profit 355 339 + 4.6%
* Including goodwill impairment for €67M 64 2017 ANNUAL RESULTS EARNINGS PERFORMANCE
▪ Net profit - Group share: €312M, + 46.0%
▪ Diluted earnings per share: €5.31, + 44.7%
▪ Positive impact of the US tax reform
€ M 2017 2016 Change
Operating profit 355 339 +4.6%
Financial result (50) (39) Income tax 9 (83) ▪ Current tax (122) (83) ▪ US tax reform impact 131 - - Reevaluation of deferred tax liabilities 147 - - Taxation on US subs (16) - Effective tax rate 33.0% 27.6% Minority interest (2) (3) Net profit - Group share 312 214 + 46.0% Diluted earnings per share (€) 5.31 3.67 + 44.7% Weighted average number of shares* (M) 58.8 58.2
* Used to calculate diluted earnings per share 65 2017 ANNUAL RESULTS CASH FLOW
▪ Strong increase in net free cash flow: + 37.3%
▪ Controlled expansion and optimized allocation of financial resources • Capex ratio down to 3.5% vs 5.2% in 2016 • Cash conversion ratio**: 45% vs 42% in 2016
€ millions 2017 2016
Cash flow* 529 409
Change in working capital (58) 17 Net capital expenditure (147) (190) % revenue 3.5% 5.2%
Net free cash flow* 324 236
* After interest paid ** Net free cash flow/EBITDA before non-recurring items 66 2017 ANNUAL RESULTS BALANCE SHEET SUMMARY
▪ Decrease in net debt
▪ Net debt/EBITDA restated ratio = 1.88x
▪ S&P long-term credit rating: BBB- investment grade Working Capital* (2014-2017)
€ M 12/31/2017 12/31/2016 (€ M) €1 = US$1.20 €1 = US$1.05 500 20,0% 433 Non-current assets 3,116 3,672 416 412 400 384 o/w Intangible assets 2,622 3,110 15,0%
Working capital* 433 412 300 13,9% 12,2% Total net assets 3,549 4,084 11,3% 10,0% 200 10,4% Equity 1,922 1,921 5,0% Provisions and deferred tax liabilities 301 496 100
Net financial debt 1,326 1,667 0 0,0% Total equity and net liabilities 3,549 4,084 2014 2015 2016 2017
Working Capital/Revenue
* Defined as: trade receivables + current income tax receivable + other current and financial assets – trade payables – current income tax – other current liabilities 67 2017 ANNUAL RESULTS STRONG AND DIVERSIFIED FINANCING
▪ Average cost: 2.44%
▪ Average maturity: 4.8 years
▪ Diversified financing sources
▪ Well protected against rising rates
Diversification sources Rate type
6% 29% 40% 37% 60%
29%
Bank loans USPPs EUR Bond NEU CPs Fixed Floating
* New European Commercial Papers 68 2017 ANNUAL RESULTS DIVIDEND
▪ Dividend at €1.85, up + 42.3%
▪ Stable pay-out ratio at 35%
€ €1.85 1,80
1,50 €1.30 €1.20 1,20 €0.92 0,90 €0.80 €0.68 0,60 €0.46 €0.33 0,30
0,00 2010 2011 2012 2013 2014 2015 2016 2017
69 ALTERNATIVE PERFORMANCE MEASURES
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. 70 FOLLOW US
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