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Teleperformance: 2012 Financial Results

  Teleperformance: 2012 Financial Results

Business Wire

PARIS -- February 26, 2013

RegulatoryNews:

The Board of Directors of Teleperformance (Paris:RCF), the global leader in
customer experience management, met today and reviewed the consolidated
financial statements for the year ended December 31, 2012. The Group also
announced its financial results for the year 2012.

Strong growth in revenue and earnings, above Group’s target

  *Revenue: €2,347.1 million

Organic growth: 6.9% year-on-year

  *EBITA before non-recurring items: €213.9 million, up 18.3% year-on-year

EBITA margin before non-recurring items of 9.1% versus 8.5% in 2011

  *Strong growth in the Ibero-LATAM region and a continuing recovery in
    operations in most European countries.
  *Diluted earnings per share: €2.27, up 39.3% year-on-year

Full-year 2013 outlook

  *Continuing revenue gains, with organic growth of 3% to 5%

  *Continuing margin improvement, with an EBITA margin before non-recurring
    items of 9.3% to 9.5%

  *Strengthened governance as from June 2013

2012 FINANCIAL HIGHLIGHTS

                                                                  
€ millions                             2012           2011           Change
                                      €1 = US $1.29  €1 = US$ 1.39  
Revenue                                2,347.1        2,126.2        10.4%
EBITDA before non-recurring items       306.2           268.4           14.1%
% of revenue                            13.0%           12.6%
EBITA before non-recurring items*       213.9           180.8           18.3%
% of revenue                            9.1%            8.5%
Operating profit                        193.2           152.3           26.9%
Net profit – attributable to            127.5           91.9            38.7%
shareholders
Diluted earnings per share (€)         2.27           1.63           39.3%

*Operating profit before amortization of acquired intangible assets and
non-recurring items

- Non-recurring items represented a net expense of €11.8 million in 2012 and
€19.2 million in 2011

- Amortization of acquired intangible assets amounted to €8.9 million in 2012
and €9.3 million in 2011

Daniel Julien, Chairman and Chief Executive Officer of Teleperformance, said:
“In 2012, we saw a significant increase in business, with reported growth of
10.4% and organic growth of 6.9%, exceeding our objectives. EBITA margin
before non-recurring items sharply improved during the year, to 9.1% of
revenue, again beating our initial objective. This good performance was
primarily driven by the fast growth in our businesses in the Ibero-LATAM
region, notably in Brazil where we are benefiting from a favorable environment
and a premium positioning in expanding industries. In Europe, operations in a
certain number of countries, such as the United Kingdom, Spain and Germany,
reported a rebound in business and margins. Thanks to the tight management of
our capital expenditure and assets, we once again increased our return on
capital employed. These very good results confirm our global leadership of the
outsourced customer experience management market and demonstrate the success
of our value-creating growth strategy.

Today, we are leveraging a number of powerful advantages to seize the
opportunities offered by the mobile Internet revolution, which has only just
begun. These include 140,000 young, ambitious, motivated employees, integrated
processes and technology and an extremely solid customer base. The right
moment has now come to carry out a smooth, orderly transition in the Group’s
leadership. The Board of Directors will therefore ask shareholders at the
Annual Meeting next May 30 to elect Paulo Cesar Vasques as director, with the
aim of appointing him Chief Executive Officer. An engineer with an MBA degree,
Mr. Vasques, 43, is an outstanding executive who in Brazil, in just a few
years, successfully developed one of our most remarkable member companies. He
is the symbol of a new generation of leaders, aged 35 to 50, who represent the
life blood of our Group and who are now gradually moving into positions of
responsibility, where they will drive our profitable growth for decades to
come. I will remain Chairman of the Board of Directors and continue to
exercise my CEO’s duties with Teleperformance Group Inc. for at least two or
three more years.

For 2013, we expect to deliver further gains in revenue, EBITA margin before
non-recurring items, and return on capital employed, reflecting our confidence
in our positioning and the future of our markets.”

REVENUE

CONSOLIDATED REVENUE

Consolidated revenue amounted to €2,347.1million in 2012, an increase of
10.4% as reported. At constant scope of consolidation and exchange rates,
organic growth was 6.9%, outpacing the 3.5% reported in 2011.

Changes in exchange rates, mainly the appreciation of the US dollar against
the euro, added €71.9 million to reported revenue.

Changes in the scope of consolidation had a slight €2.2-million negative
impact, reflecting the disposal of the Hungarian subsidiary in 2011.

The 6.9% organic growth was led by the increase in business in the Ibero-LATAM
region, particularly in Brazil.

Organic growth also gained momentum throughout the year, increasing from 3.1%
in the first half.

REVENUE BY REGION

                                                      
€ millions                             2012     2011     Change
                                                         Reported  Organic
                                                               
English-speaking market &              910.4    819.6    + 11.1%   + 3.2%
Asia-Pacific
Ibero-LATAM                            737.6    628.1    + 17.4%   + 16.5%
Continental Europe & MEA               699.1    678.5    + 3.0%    + 2.6%
TOTAL                                  2,347.1  2,126.2  + 10.4%   + 6.9%

  *English-speaking market & Asia-Pacific

Regional revenue rose by 11.1% over the year, lifted by the increase in the US
dollar and, to a lesser extent, the British pound against the euro. At
constant scope of consolidation and exchange rates, growth in the region was
3.2%.

Growth strongly varied from one half to the next. In the first half, business
showed a year-on-year decline due to the particularly high prior-year
comparatives, reflecting the ramp-up of a significant contract in the United
States in first-half 2011. Second-half figures, however, benefited from a much
more favorable basis of comparison, enabling regional operations to return to
growth over the full year.

Operations in the United Kingdom enjoyed significant growth following contract
wins in new industries.

  *Ibero-LATAM

Regional revenue rose by 17.4% as reported and 16.5% at constant scope of
consolidation and exchange rates.

The Group enjoyed a positive dynamic across the region during the year, with
operations in every country except Argentina delivering revenue gains.

Growth was spectacular in Brazil, where operations are benefiting from a
favorable economic environment and their premium positioning, which is helping
to drive market share gains in the country’s fast expanding industries, such
as banking and the Internet/media sector.

Operations in Spain have returned to growth. In Portugal, the Group continues
to benefit from its high value-added positioning thanks to its multilingual
hubs offering. This end-to-end customer experience management solution has
proven highly successful with large accounts seeking to simplify their
customer service strategy in Europe.

  *Continental Europe & MEA

Regional revenue ended the year up 3.0% as reported and 2.6% at constant scope
of consolidation and exchange rates.

The renewed growth momentum was driven by the improvements reported in
Northern Europe, the Eastern European countries, Greece and Turkey. Firm
demand in Germany, the Netherlands and, to a lesser extent, Italy also made a
positive contribution to the year’s performance.

All of these positive factors helped to offset the decline in business at
Teleperformance France which remained impacted by the major shift in the
competitive landscape of its largest market, mobile telephony.

The contrasting trends in Teleperformance’s three core operating regions over
the past three years have noticeably altered its profile. Continental Europe
now accounts for less than 30% of consolidated revenue, while the Ibero-LATAM
region represents 31% and the English-speaking market & Asia-Pacific region
39%.

RESULTS

Consolidated EBITDA before non-recurring items rose by 14.1% to €306.2 million
in 2012, representing 13.0% of revenue versus 12.6% in 2011.

Consolidated EBITA before non-recurring items stood at €213.9 million for the
year, an 18.3% gain on the €180.8 million reported in 2011. EBITA margin
before non-recurring items widened to 9.1% from 8.5% a year earlier, exceeding
the Group’s target, which was at the upper end of a range from 8.5% to 9%.

EBITA MARGIN BEFORE NON-RECURRING ITEMS BY REGION – EXCLUDING THE HOLDING
COMPANY

                                             
% of revenue                            2012   2011
English-speaking market & Asia-Pacific  11.3%  10.3%
Ibero-LATAM                             12.6%  11.1%
Continental Europe & MEA                0.6%   0.4%
TOTAL                                   9.1%   8.5%

All of the operating regions helped to drive margin improvement over the year.
The English-speaking market & Asia-Pacific and the Ibero-LATAM regions
continued to deliver double-digit EBITA margins before non-recurring items,
with year-on-year increases to respectively 11.3% and 12.6% in 2012. The
Continental Europe & MEA region reported a positive margin, up slightly on
2011.

Non-recurring items represented a net expense of €11.8 million for the year,
analyzed as follows:

  *€2 million in costs of closure related to two subsidiaries based in
    Austria and Vietnam, where market’s size and growth outlook no longer
    warranted a local presence;
  *€9.8 million related to the 2011 performance share plan, as the requisite
    performance criteria were met.

After accounting for these non-recurring items and the amortization of
intangible assets (€8.9 million versus €9.3 million in 2011), operating profit
came to €193.2 million for the year, up a sharp 26.9% from 2011.

Net financial expense stood at €7.3 million, versus €5.6 million in 2011. It
included a non-recurring €3 million expense incurred in setting the new
€300-million syndicated line of credit.

Income tax expense amounted to €56.5 million for the year, corresponding to an
effective tax rate of 30.4%, versus 35.2% in 2011. The improvement primarily
reflected the return to profit of operations in a certain number of countries
that had reported tax losses in previous years.

Following a certain number of buybacks, minority interests in net profit stood
at €1.9 million in 2012, down from €3.1 million a year earlier.

As a result, net profit attributable to shareholders came to €127.5 million,
up 38.7% from the €91.9 million reported in 2011.

CASH FLOWS AND BALANCE SHEET STRUCTURE

The programs underway for the past two years to increase cash generation were
pursued in 2012. Cash flow before non recurring items and taxes stood at
€296.1 million, up 15.3% from €256.9 million in 2011.

Restructuring cash outlays declined significantly to €10 million from €47.7
million the year before, when they rose sharply on implementation of the
restructuring plan in France that was decided in late 2010 but carried out
primarily in 2011.

Consolidated working capital requirement swung to a €26 million outflow in
2012 from a €32.6 million inflow in 2011, mainly due to the robust increase in
business at year-end, even as days sales outstanding continued to improve,
with a decline of two days vs 2011.

Net capital expenditure was nearly unchanged as a percentage of revenue, at
4.6%, and stood at €108.4 million versus €95.5 million in 2011. Net free cash
flow continued to increase, rising to €94.5 million from €88.2 million in
2011, while net cash and cash equivalents rose by €54.9 million to end the
year at €80 million.

As a result, the Group’s balance sheet at December 31, 2012 was very solid.
Equity amounted to 1,382.4 million, of which €1,376.4 million attributable to
shareholders. It amply covered the Group’s non-current assets, which totaled
€1,138.6 million at year-end.

CHANGE IN GOVERNANCE

Today, Teleperformance is a global industry leader, ready to meet the
challenges and seize the opportunities offered by the mobile Internet
revolution.

To do so, it has successfully built up a wide array of competitive advantages:

  *The robustness of its seamless processes, integrated technology and
    customer base.
  *Powerful innovation capabilities with the development of competitively
    differentiated solutions.
  *A people-driven culture, with nearly 140,000 young, motivated and
    ambitious employees.

In accordance with the commitment to separating the offices of Chairman of the
Board of Directors and Chief Executive Officer, the Board is considering:

  *Requesting Daniel Julien to retain his position as Chairman of the Board
    of Directors as well as CEO of Teleperformance Group Inc., at least for
    the next two or three years.
  *Asking shareholders at the next Annual Meeting to elect Paulo Cesar
    Vasques as director, with the aim of appointing him Chief Executive
    Officer. An engineer with an MBA degree, Mr. Vasques, 43, is an
    outstanding executive who, in just a few years in Brazil, successfully
    developed one of the Group’s most remarkable member companies.

In this way, the Group will be led towards new success by a strengthened,
younger management team, thereby demonstrating its solidity and proficiency in
managing the planning of transition from generation to the next.

FULL-YEAR 2013 OUTLOOK

In 2013, Teleperformance is pursuing its strategy of creating value and
driving balanced growth, which will lead to a further improvement in its
return on capital employed.

The English-speaking markets & Asia-Pacific and Ibero-LATAM regions are
expected to continue delivering a high EBITA margin before non-recurring
items, while the margin in the Continental Europe & MEA region, despite the
uncertain economic environment, should continue to gradually improve, notably
in France, Germany and Italy.

For the full year, Teleperformance expects to see an organic growth in revenue
of between 3% to 5%, as well as an improvement in its profitability ratios,
with the objective of an EBITA margin before non-recurring items of between
9.3% and 9.5%.

PROPOSED DIVIDEND

Following the improvement in net profit for the year, the Board of Directors
will recommend that shareholders at the Annual Meeting on May 30 approve an
increase in the 2012 dividend to €0.68 per share from the €0.46 paid in
respect of 2011, payable in cash or in shares at the shareholders’ option. The
proposed dividend corresponds to a total payout of 30%, in line with market
practices and the Group’s dividend payment policy defined two years ago.

INVESTOR CALENDAR

May 7, 2013: First-quarter 2013 revenue released

May 30, 2013: Annual Shareholders Meeting

ABOUT TELEPERFORMANCE

Teleperformance, the world’s leading provider of outsourced CRM and contact
center services, serves companies around the world with customer acquisition,
customer care, technical support and debt collection programs. In 2012, it
reported consolidated revenue of €2,347 million ($3,028 million, based on €1 =
$1.29).

The Group operates about 98,000 computerized workstations, with 138,000
employees across more than 260 contact centers in 46 countries serving 78
markets. It manages programs in more than 66 languages and dialects on behalf
of major international companies operating in a wide variety of industries.

Teleperformance shares are traded on the NYSE Euronext Paris market,
Compartment A, and are eligible for the deferred settlement service. They are
included in the following indices: SBF 120, STOXX 600 and France CAC Mid &
Small.

Symbol: RCF - ISIN: FR0000051807 - Reuters: ROCH.PA - Bloomberg: RCF FP

For further information and media inquiries please visit the Teleperformance
website at www.teleperformance.com.

STATEMENT OF INCOME

€ thousands

                                                      2012        2011
                                                                    
Revenues                                               2 347 093    2 126 222
Other revenues                                         9 980        7 348
Personnel                                              -1 650 020   -1 487 530
Share-based payments                                   -9 842       -2 044
External expenses                                      -385 938     -365 981
Taxes other than income taxes                          -13 403      -12 441
Depreciation and amortization                          -92 210      -87 646
Amortization of intangible assets acquired as part     -8 884       -9 270
of a business combination
Change in inventories                                  -557         185
Other operating income                                 6 586        5 587
Other operating expenses                               -9 644       -22 095
Operating profit                                       193 161      152 335
Income from cash and cash equivalents                  1 619        869
Interest on financial liabilities                      -12 795      -8 311
Net financing costs                                    -11 176      -7 443
Other financial income                                 29 177       33 922
Other financial expenses                               -25 275      -32 125
Financial result                                       -7 274       -5 646
Profit before taxes                                    185 887      146 689
Income tax                                             -56 569      -51 651
Net profit                                             129 318      95 038
Net profit - Group share                               127 464      91 896
Net profit attributable to non-controlling interests   1 854        3 142
Basic earnings per share (in €)                        2,30         1,63
Diluted earnings per share (in €)                      2,27         1,63

BALANCE SHEET

€ thousands

ASSETS                                        12. 31. 2012  12. 31. 2011
                                                              
Non-current assets
Goodwill                                       711 918        710 272
Other intangible assets                        88 423         97 972
Property, plant and equipment                  274 964        255 170
Financial assets                               26 981         24 099
Deferred tax assets                            36 304         32 006
Total non-current assets                       1 138 590      1 119 519
Current assets
Inventories                                    61             621
Current income tax receivable                  38 516         40 838
Accounts receivable - Trade                    479 628        450 503
Other current assets                           82 997         93 104
Other financial assets                         12 677         6 961
Cash and cash equivalents                      170 362        159 612
Total current assets                           784 241        751 639
Total assets                                   1 922 831      1 871 158
                                                              
EQUITY AND LIABILITIES                         12. 31. 2012   12. 31. 2011
                                                              
Shareholder's equity
Share capital                                  141 495        141 495
Share premium                                  556 181        556 181
Translation reserve                            17 415         23 554
Other reserves                                 661 257        551 983
Equity attributable to owners of the company   1 376 348      1 273 213
Non-controlling interests                      6 079          4 364
Total shareholder's equity                     1 382 427      1 277 577
Non-current liabilities
Long-term provisions                           6 639          5 755
Financial liabilities                          13 914         25 686
Deferred tax liabilities                       47 310         48 357
Total non-current liabilities                  67 863         79 798
Current liabilities
Short-term provisions                          14 814         25 898
Current income tax                             32 221         26 577
Accounts payable - Trade                       80 483         83 345
Other current liabilities                      268 573        269 106
Other financial liabilities                    76 450         108 857
Total current liabilities                      472 541        513 783
Total equity and liabilities                   1 922 831      1 871 158

CASH FLOW STATEMENT

€ thousands

Cash flows from operating activities                      2012      2011
                                                                      
Net profit - Group share                                   127,464    91,896
Net profit attributable to non-controlling interests       1,854      3,142
Income tax expense                                         56,569     51,651
Depreciation and amortization                              101,083    96,439
Change in provisions                                       -9,984     -37,750
Unrealized gains and losses on financial instruments       -713       1,206
Share-based payments                                       9,842      2,235
Net gains on disposal of non-current assets (after tax)    133        494
Income tax paid                                            -57,221    -58,244
Other                                                      -45        -71
Internally generated funds from operations                 228,982    150,998
Change in accounts receivable - trade                      -30,922    33,100
Change in accounts payable - trade                         -8,970     -9,605
Other changes                                              13,868     9,172
Change in working capital requirements relating to         -26,024    32,667
operations
Net cash flow from operating activities                    202,958    183,665
                                                                      
Cash flows from investing activities
                                                                      
Acquisition of intangible assets and property, plant and   -109,921   -97,114
equipment
Acquisition of subsidiaries, net of cash acquired          -5,035     -15,087
Loans and advances made                                    -3,957     -32
Proceeds from disposals of intangible assets and           1,516      1,609
property, plant and equipment
Proceeds from disposals of other non - current assets      126        1,182
Net cash flow from investing activities                    -117,271   -109,442
                                                                      
Cash flows from financing activities
                                                                      
Proceeds from the issue of share capital                   379
Acquisition of treasury shares                             -267       -18,015
Dividends paid to parent company shareholders              -25,488    -18,654
Dividends paid to minority interests in consolidated       -181       -256
subsidiaries
Proceeds from new borrowings                               254,855    39,722
Repayment of borrowings                                    -293,980   -38,942
Net cash flow from financing activities                    -64,682    -36,145
                                                                      
Change in cash and cash equivalents                        21,005     38,078
Effect of exchange rates on cash held and                  -7,699     -2,717
reclassifications
Net cash at January 1                                      147,073    111,712
Net cash at December 31                                    160,379    147,073

NB: The consolidated financial statements have been audited. The auditors will
issue their report once they have completed the procedures required for the
publication of the annual financial report

Contact:

INVESTOR RELATIONS
Teleperformance
QUY NGUYEN-NGOC, + 33 1 53 83 59 87
Investor Relations Director
quy.nguyen@teleperformance.com
 
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