Teleperformance Group Overview - Including Q1 2018 Quarterly Information
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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
in265
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 102
MARKET ENVIRONMENT
11MARKET 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) 12MARKET 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* (%)
$bn CAGR
North Regions 2017 – 2020
5.3% 4.7% 4.9% 4.9% America 42%
90 5,00% North America
3.1% 82.6 APAC offshore North America (NA) dom. + 1.8%
80 75.1
78.8 3,00% (dom.)
71.7 16% LATAM nearshore for NA + 7.1%
22%
70 66.1 68.1
1,00% APAC offshore for NA + 7.0%
LATAM Total NA + 4.4%
60 -1,00%
offshore
50 -3,00% APAC LATAM dom. + 4.5%
4%
40 -5,00%
22% Asia-Pacific dom. + 6.0%
LATAM EMEA + 4.6%
30 -7,00% 11%
2015 2016 2017e 2018e 2019e 2020e
Total outsourced market + 4.8%
EMEA
Annual growth
25%
* Excluding payment collections - Source: Frost & Sullivan (2017)
13MARKET ENVIRONMENT IN CORE SERVICES
COMPETITIVE ENVIRONMENT
▪ Worldwide leader in its core services market with a unique global positioning, as more diversified than competitors
▪ A still fragmented market, with Teleperformance market share at 6%, being consolidated by its leaders
▪ Enlarged competitive environment resulting from the evolution of Teleperformance business mix profile
Top direct competitors in contact centers outsourcing – Ranking by number of countries - footprint*
ranking by revenue in 2017* (2017)
($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 14MARKET 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 Tata Consulting Services (TCS)
Transcom
Revenues
BPO companies based in India, IT service suppliers
15MARKET 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)
US over-the-phone interpreting market Increase in the number of non-English speakers* in World visa application Market share of the main players in the
management market outsourcing global markets of visa application
(2012-2018e) the USA rate in 2016 – in %* management in 2017 – in %*
Annual growth rate 67.3
63.2
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
163
STRATEGY AND GOVERNANCE
17STRATEGY 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)
18STRATEGY 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"
Differentiating factors
Diversified vertical client base sharing worldwide best practices and bringing value-added
solutions
Strategic assets
Consistency across geographies ▪ Documented, standardized and audited operational
procedures around the world
Integrated omnichannel solutions ▪ Providing a seamless customer experience with TP Client, a
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
19STRATEGY 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
Organic growth
▪ 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)
▪ 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).
External
growth
Strategic
▪ Targeted acquisitions in high-value specialized services
acquisitions
* Customer Experience Optimizer 20STRATEGY 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
21STARTEGY 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
CEMEA President
David Rizzo** Ibero-LATAM
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) 224
STRATEGY IN ACTION:
ACQUISITION OF INTELENET
23ACQUISITION 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
24ACQUISITION 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 25INTELENET 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%*
Intelenet Snapshot
Positive momentum
55,000 employees
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
Worldwide footprint: 8 countries 9%
business clients*
Accounting, Other
Other, incl. Retail and Manufacturing
12%
Human 10% Healthcare
67% Industry - Specific
Resources Integrated 6%
Europe incl. Outsourcing BFSI*
UK United Services
9% Public sector 45%
21% States 47%
10%
35%
4 main service types provided in 25 languages Telecom, Media
Customer
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
26INTELENET 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
Core Business services
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
Order to cash (client order processing)
Customer E-services
2. With a global delivery approach combining
Management Social media
• Operational excellence Services Contact center
• Process automation Analytics services
Consulting/
Guidance on operational services
capabilities
• Consulting capabilities Next-Gen Knowledge Services
Process optimization
Robotics solutions
Digital
Artificial intelligence
Offerings
Machine learnings
27INTELENET 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
(Current Cost Indexed to 100)
with strong digitization experts record of
analytics • Innovation capabilities developing best-
expertise and • Robust technology enablers in-class Business
Six Sigma Intelligence and
background Management
coupled with Information
excellent solutions plus
business tools &
40 – 60% acumen technology in
Analytics
Operating Process Labor cost Technology
optimisation Automation arbitrage
rigor
Process
Analytics
Consulting
Operational Analytical Tech Tools
Excellence Consulting
28INTELENET 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.
The client was also looking for reduced costs and
Intelenet solution
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
29INTELENET 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
30FINANCIAL 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
31FINANCIAL IMPACT FOR TELEPERFORMANCE
FINANCIAL PROFILE AND OUTLOOK BY BUSINESS
FY 2018 Normative annual
Revenue (US$m) growth
Revenue breakdown by business
(ended March 31, 2018)
Core Services
Core Services (India) 150 + 10% / + 12% (India)
33%
Specialized Services 299 + 10% / + 12%
Total 449 + 10% / + 12% Specialized
Services
67%
FY 2018
EBITDA (ended March 31, 2018) Margin objective EBITDA breakdown by business
(US$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
32FINANCIAL 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
33FINANCIAL 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
345
Q1 2018 REVENUE AND FY 2018 OUTLOOK
35Q1 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 36Q1 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
37Q1 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% + 7% Estimated average
6% + 7% annual market
+ 7%
+ 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 38Q1 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 – Weaker performance in the telecommunications segment, especially in the Philippines
229
Ibero- Ibero- – Good pace of growth in Asia
LATAM + 7.0%
like-for-like LATAM
271 274
– Stable business volumes in the United Kingdom
+ 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
– Dynamic growth in revenue from global clients in Eastern Europe, Greece, Egypt and
As reported Like-for-like
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
392018 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 406
APPENDIX 1
Key Differentiating Factors
Governance Structure
Teleperformance Shareholding
41KEY 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% 7% 3%/97%
6%
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 42KEY 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%
40%
70% diversification in new verticals, with recent
68%
30% significant accounts gained in the New
38% 63% 61%
20% 34%
Economy in particular
10% 31% 30%
10% 7% 8%
6%
0% • Global accounts represent nearly 40% of total
Top1 Top10 Top 50
2007 2013 2015 2017
Group revenue
In 2017 - Top20: 43% Top100: 75%
* Excluding LanguageLine Solutions revenues in 2017, company acquired on September 19, 2016 43KEY 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
44KEY 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
45KEY 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
46KEY 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”
47KEY 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
48KEY 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
49KEY 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
Travel & Chat Support Desk
Gaming ATLANTICO
Tourism
Backoffice
ecommerce Financial
Services
Social Face-to-Face
Media OCEANARIO
Media Technology
50KEY 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
51KEY 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
52KEY 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% 4%
14% 14%
17%
14% 12%11%
2% 2%
FAVORITE 12% 11% 12% 10% 9% 9%
11% 7%
4% 3% 6% 7% 5% 7% 6% 9% 6% 5% 4%
4% 3% 2% 2% 4% 4% 3% 2% 1% 2% 3% 2%
CHANNEL 4% 5% 4% 4% 2% 1% 0% 2%
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)
53KEY 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 Knowledge Customer Case
Multi- Integration
Process Base Database Classify
Channel
Workflow
54KEY 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)
55KEY 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)
Document translation and software / systems
Others
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%
56KEY 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
Republic languages European
53% USA
13% languagesKEY 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 • Long-term contracts with
Online interpretation
• 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
(budget cuts, appetite for attracting ▪ Visa outsourcing market has
▪ 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
58GOVERNANCE 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
59TELEPERFORMANCE 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
30% • Daniel Julien 1.7%
Institutional Continental
Others**
investors Europe
14% Other • Retail investors,
86% (excl. France)
(Asia, South
25% incl. TP’s 8.0%
Africa, etc.)
2%
employees
France • Brokers 4.0%
27%
* As of March 31, 2018 606
APPENDIX 2
2017 Annual Results
Alternative Performance Measures
612017 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 622017 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 632017 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 642017 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 652017 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 662017 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% 10,0%
Total net assets 3,549 4,084 11,3%
200 10,4%
Equity 1,922 1,921 5,0%
100
Provisions and deferred tax liabilities 301 496
Net financial debt 1,326 1,667 0 0,0%
2014 2015 2016 2017
Total equity and net liabilities 3,549 4,084
Working Capital/Revenue
* Defined as: trade receivables + current income tax receivable + other current and financial assets – trade payables – current income tax – other current liabilities 672017 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 682017 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
69ALTERNATIVE 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.
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