TELEPERFORMANCE_Registration_document_2017

COMMENTS ON THE FINANCIAL YEAR

6

6.1 Review of the Group’s financial position and results

The downturn in business volumes in the United Kingdom was mainly due to the unfavorable economic and currency environment caused by Brexit, which caused the Group’s existing and potential clients to adopt a wait-and-see attitude. However, thanks to the improvements observed during the year, the Group is confident that business will be stronger in 2018. In Asia-Pacific, annual growth was not as strong as expected because of the slow start-up of the sites recently opened in China and Malaysia. Given the outlook for new business, growth is not expected to pick up again until the second half of 2018. Ibero-LATAM In the Ibero-LATAM region, revenue rose by +22.4% like-for-like and by +22.6% as reported to represent €1,084bmillion in 2017. The net currency impact was limited, as the positive effects of gains in the Brazilian real and Colombian peso against the euro were offset by declines in the US dollar and the Argentine and Mexican pesos, also against the euro. Teleperformance continued to benefit from the significant investments made in the region in 2016band 2017band from the successful diversification of its client portfolio among large local and international companies in various business sectors, including leading players in the new economy. Operations in Portugal (multilingual platforms), Colombia and Brazil, along with offshore activities in the region, including in Mexico, delivered the highest levels of growth. To help meet strong demand in the region, the Group established a presence in Peru during the year. In addition to a high-potential domestic market, Peru offers an attractive geographic position, as well as a working population and an environment that are favorable to offshore services. Continental Europe & MEA Regional revenue rose by +8.1% like-for-like and by +6.1% as reported. The negative currency effects stemmed mainly from the fall in the Egyptian pound and the Turkish lira against the euro. Growth accelerated during the second half of the year to reach +10.7% like-for-like in the fourth quarter. The faster pace of expansion reflected brisk sales momentum with global clients. The best performances were primarily achieved in the following geographies: ■ in the Mediterranean region, in Greece (multilingual platforms), Egypt and Turkey; ■ in Eastern Europe (Russia, Poland and Romania); and in Scandinavia. The region’s fastest growing markets are consumer electronics, retail, leisure, financial services, travel agencies, transportation and consumer goods. E-services accounted for a good number of the contracts awarded throughout the year, particularly in retail. Momentum in the region is strong and the economic environment favorable. Business is therefore expected to continue to progress well in 2018. ■

Specialized services Annual revenue from Specialized services totaled €638bmillion in 2017, versus €335bmillion in 2016. On a like-for-like basis, revenue growth was +10.4%. LanguageLine Solutions, the leading provider of online interpreting services to the US market, saw its business growth accelerate in the fourth quarter, notably due to the impact of hurricanes in the United States. For the full year, the Company posted revenue growth that was in line with the forecasts provided to the Group during the acquisition process. Business at LanguageLine Solutions is expected to continue to expand at a similar pace in 2018. TLScontact once again delivered strong business growth, driven by an increase in visa applications and by brisk sales of add-on services. Growth will continue to be sustained by tourist traffic, which is set to remain high in 2018 (particularly out of Asia), but is expected to be impacted by a higher basis of comparison The LanguageLine Solutions and TLScontact businesses accounted for around 85% of Specialized services revenue in 2017. 6.1.2.2 Results EBITDA before non-recurring items amounted to €720bmillion in 2017, up +28.8% year-on-year, for a margin of 17.2% versus 15.3% in 2016. EBITA before non-recurring items rose by +35.9% to €556bmillion from €408bmillion in 2016. EBITA margin before non-recurring items widened by 210bbasis points to 13.3% from 11.2% in 2016. Including the contribution of LanguageLine Solutions over 12bmonths, the margin widened by 50bbasis points year-on-year (12.8% probforma). The further improvement in the Group’s profitability in 2017breflected the following key trends: ■ increased margins for Core services, with bullish business growth in the Ibero-LATAM region, which has the highest margins of the Group’s three linguistic regions (mix effect), and a continued gradual recovery in margins in Continental Europe & MEA; ■ increased margins for Specialized services, with continued strong growth in outsourced visa application management services (TLScontact) and the first-time consolidation over a 12-month period of LanguageLine Solutions, a high-margin business (mix effect). The table below shows the EBITA margin by activities:

2017 10.3

Current EBITA margin (inb%)

2016

Core services

9.7 9.2

English-speaking market & Asia-Pacific

8.8

Ibero-LATAM

12.3

12.3

Continental Europe, Middle East & Africa

5.0

3.8

Specialized services

29.9 13.3

25.9 11.2

TOTAL (INCLUDING HOLDING )

Teleperformance bb - bb Registration Documentbb 2017 160