TELEPERFORMANCE_Registration_document_2017

COMMENTS ON THE FINANCIAL YEAR

6.1 Review of the Group’s financial position and results

the German market, thereby improving the competitiveness of its offering in the region. In light of the promising economic environment and its positioning in the region, the Group is confident that margins will continue to improve in 2018. b Specialized services Specialized services reported EBITA before non-recurring items of €191bmillion in 2017, compared with €87bmillion the previous year. EBITA margin before non-recurring items increased to 29.9%, versus 25.9% in 2016. The change was primarily due to the first-time consolidation of LanguageLine Solutions over a 12-month period in 2017. If the contribution from LanguageLine Solutions had been included over the full 12bmonths in 2016, revenue and EBITA before non-recurring items for that year would have been €3,910bmillion and €178bmillion respectively, for a margin of 29.9%. Specialized services margins are expected to remain high in 2018. 6.1.2.3 Résults Operating profit rose to €355 million, versus €339 million in 2016. This included: ■ amortization of intangible assets on acquisitions in an amount of €87 million, up from the previous year due to the acquisition of LanguageLine Solutions LLC; ■ an impairment loss on goodwill in an amount of €67 million; ■ €24 million in accounting expenses on the performance share plans; ■ €23 million in other non-recurring expenses mainly corresponding to the estimated costs relating to the reorganization of the French business and to a provision made in respect of a non-compete agreement. The financial result represents a net expense of €50 million, versus €39 million in 2016. Income tax expense amounted to €122 million excluding the effect of the US tax reform resulting in a profit of €131 million. In 2017, the Group recognized an income tax credit of €9 million. Net profit attributable to minority interests represented €2 million. Net profit Group share came to €312 million for the year, up 46.0% from €214 million reported in 2016. Diluted earnings per share amounted to 5.31, up from €3.67 in 2016. The Board of Directors will recommend that shareholders at the annual general meeting on Februaryb28 th , 2018bapprove an increase in the 2017bdividend to €1.85 per share from the €1.30 paid in respect of 2016. This would correspond to a payout ratio of 35% unchanged from the prior year.

Core services Core services recorded EBITA before non-recurring items of €365bmillion in 2017, compared with €321bmillion the previous year. EBITA margin before non-recurring items increased to 10.3%, versus 9.7% in 2016. English-speaking market & Asia-Pacific The English-speaking market & Asia-Pacific region posted EBITA before non-recurring items of €141bmillion in 2017, down from the previous year. EBITA margin before non-recurring items came to 8.8% versus 9.2% in 2016. This primarily reflects: ■ an unfavorable geographic mix effect, with growth in domestic business in the United States stronger than growth in offshore business in the Philippines. Offshore activities flattened during the year to the advantage of nearshore business in Mexico (Ibero-LATAM region), a country that currently has high appeal among clients; ■ a very gradual ramp-up of the sites opened in China and, more recently, Malaysia; ■ an uncertain economic environment in the United Kingdom, which is holding back the Group’s revenues and margins. Given the contracts signed recently and the projects already under way, together with continued cost discipline and the non-recurrence of the negative effects felt in 2017, the Group is confident in its ability to improve margins in the region in 2018. Ibero-LATAM EBITA before non-recurring items in the Ibero-LATAM region rose to €134bmillion in 2017, from €109bmillion the previous year, and the margin remained high at 12.3%, unchanged from 2016. Growth in operations in Portugal and Colombia was particularly robust and profitable over the year, while margins continued to improve steadily in Spain. The region benefited once again from the currency trends that continue to favor nearshore business in Mexico serving the US market. With the market environment remaining very dynamic, the Group intends to continue to improve its margins in the region. Continental Europe & MEA In the continental Europe & MEA region, Teleperformance remained on the steady upward trend in profitability that began in 2012. EBITA before non-recurring items amounted to €43bmillion in 2017, for a margin of 5.0% versus 3.8% in 2016. The increase reflects two main positive factors: ■ strong growth in demand from global clients, notably through the sustained development of multilingual solutions, and very good margin improvements in a number of countries in Southern and Eastern Europe, including Turkey, Egypt and Romania. The mix effect stemming from strong growth in business in Greece and Russia was also positive; ■ ongoing improvement in profitability driven by strict cost discipline in certain countries, such as Germany and the Nordics, and to a lesser extent Italy with the development of its offshore solutions in Albania. The Group strengthened its offshore portfolio by setting up operations in Kosovo to serve

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Teleperformance bb - bb Registration Documentbb 2017 161