Executives: Olivier Rigaudy – Chief Financial Officer
Analysts: Denis Moreau – UBS Christophe Chaput – Oddo Patrick Jousseaume – Société Générale Laurent Gelebart – Exane

Olivier Rigaudy: Good evening all of you. I'm really happy to be here to present to you the result of the first half. I hope you have received a press release and you had the time to look at it. I am going to present you much more in detail with this presentation, the first half result. We are going to cover three items just as a start some key fact to mention and some figures.

We'll go deeper after as a first half results and I will finish with 2016 final outlook. First half and key facts for figure for the first half of 2016, just key facts and figure. I would say there are three major points here to be noticed for this first half. The first one, we have been able again to register a strong like-for-like growth in revenue, plus 6.8%. Not only we have been able to grow and probably better than we made the first quarter, but we have also been able to increase on margin by 20 basis points versus last year in the first half.

Last but not least, we have been working a lot on that, but the net free cash flow of the period is significantly climbing versus also the last year for the same period. That are the three key takeaways of this first half, which needs to be highlighted from the very beginning, and of course we'll come back in later on this figure and the detail of this figure. Just for you to know, the diluted earnings per share up, achieved a level of €1.48 per share. What happened in this quarter, it is out here, notably this quarter? You'll find here on the right side of this slide also presentation of the figures that we are now, known since the end of the year for the 2016 year, but since the beginning of the year, we have open in H1 more than 8,000 working station again. This is made of new sites and extended sites.

You can see here that we have open new site in China, in the Philippines, in Australia, in Brazil and very recently Madagascar. So there are totally brand new site that we'll be ramping up all along the year, some of them later on than other, but starting to implement and increase our sales figure in 2016. Not only we have been able to create new site, but we have extended sites in the U.S., Canada, China, Colombia, Mexico, Brazil, Portugal, Russia, Albania and Lithuania. As you can see the group is worldwide place – I would say dispersed and is continuing to opening new site, but also to expand the site that is already operating in all the countries that we are working which are 65, as you can see on the right side of the slide serving 160 markets. So as the work which has been done all along this first half or the six months, let's go back now to much more – in much more detail for the first half results in 2016.

So first point to notice is the level of the dollar is flat compared to last year, $1.12, it didn't change from versus last year, which is not the case for all the currency, I will come back in a minute to that as you can see the difference between the like-for-like which is 6.8% and the reported growth which is 1.8%. Quick word about EBITDA, EBITDA is also climbing by close to 5% and what is interesting is not only it's climbing by 5%, but rate to sales is climbing by 40 basis points showing the growth of the operating result of the group in this first half. At EBITDA level, the growth is 20 basis point more, a little less than EBITDA showing the CapEx that we have done in the last 18 months that are amortized significantly in this first half, but that's good for the future, showing that we are able to [not] ph and to follow the growth that we expand from now more than four years. Operating profit is climbing by 4% and net profit by close to 4% to a level of €86 million versus €83 million last year. The diluted earnings per share is climbing by 2.1% and is taking accounts all the diluted share that we issued this first half.

Coming to the sales, clearly we had a negative translation effect on the sales, €77 million as you can see. Just for you to know more than – close to two-third of this amount is coming from the Latin America currency, Brazilian Real, Mexican Pesos, Colombian Pesos and Argentinean Pesos. That is the main impact in the first half that we experienced it. We had another impact on the Philippines Pesos and lastly on the British Pound. But despite the decrease of this effect, we have been able to generate the like-for-like growth of close to €110 million between the two semesters that is 6.8% that is shown on this slide.

What we can tell about in this first half, I would say a breakdown of the sales. Thing that you would probably know for why, but which is continuing is the fact that keep on going because we are [indiscernible] in H1. You remember it happened already from 2012 to 2015, we show it on the slide on the right part. As you can see this trend we started four years ago is continuing. On the left side of the slide you will see that, what we call the non-Teleco/Internet/Pay-TV is now account for 71% of our sales, while it was 65% in the first half of last year and 67% for the full year last year.

Why? Because we have strong momentum in Healthcare, in Insurance, in Financial Services, Retail and Consumer Electronics as we are for now over two years. One point to be noticed, we have also business gain sharing on new economy that is for the first time interesting to mention. And I do believe and I am not the only one to believe that Teleperformance benefits from the largest and the most diversified client base in this industry. If we look now to sales by region, you will see that EWAP world, we call EWAP world for those who know us account for half of the business now. It is truce since close to 2014, 2015 and now it's confirmed in this first half, EWAP world is 50% of our sales, while the two other zone [ph] depending of the effects are close to 25%.

Let's move now to the result by region and especially the sales by region. What is interesting here is to show to see that the sales by, on the second quarter have dramatically increased versus the first quarter. All of you, you remember that we have announced a 5.5% growth in first quarter, we are now showing plus 8.2% like-for-like growth in this quarter. It was weighted, we knew that EWAP showed increase even issued comps [ph] we had last year. But we have been also able to increase our sales in Ibero-LATAM and I'll come back in a minute to that because it's probably unsuspected and weighted, and we continue to deliver a significant growth in the European side of our business including TLS.

So as a whole, the group is achieving plus 6.8% like-for-like, spread that way which is 4.2% in English-speaking market, 6.9% in Ibero-LATAM and close to 12%, 11.8% for CEMEA. Let's move now to much more detail by regions. So we'll start by EWAP, and first of all by the sales figure. As expected – as mentioned a minute ago, we had faster growth in a faster growth in [indiscernible] which was weighted but we did it and we had good performance in this sector that I just mentioned a minute ago. What is interesting too, is we have here a decrease dependence on the Telco sector which is confirmed in the first half.

And we know and that is continuing. We have a business is continuing to grow in China and India. That's a global picture of the sales of the region. If we now move to the result by operating margin, you remember that we had unfavorable basis of comparison that explain as a decrease of either the volume and either the rate of the operating margin in H1, which move from 9.2% to 7.9%, close to 8%, which is 10 million FX versus last year. Whatever it's come from, it's come from the unfavorable basis of comparison mainly in Q1 which was like it along the year.

Again as we lived in the second part of the year last year, negative geographical mix which is linked to fact that we are much more domestic on the new business and offshore in the past. We have also a gradual ramp up of the new site, and I mentioned that we open new site and extended some site in China and Australia. And if you look precisely most of the new sites there have been new workstations – sorry, have been opening in this region, and of course we have the ongoing increase in security cost as planned, but as a reason of the result for our English [ph] world. If we now move to Ibero-LATAM world, again we are experiencing a faster growth in Q2. It's due mainly to two main country; Portugal and Colombia.

Portugal most of you know a multilingual hub that is a continuing fantastic hit and fantastic success that is continued to be live. And we have also good production in Colombia that was less good last year and we are back on track. Another point to be mentioned is a good resilience from operation in Brazil. We get some new sector, all the sectors that I mentioned earlier on and we have been able also to attract business in Brazil from outside client leading that operating from abroad from Brazil. The global environment of course in terms of ethics is less good and has an impact on our sales.

If we now come to the margin, again we have seen good margin and continue to progress margin close to 11% in the first half, because of the gross of the operation in Portugal and Colombia and some favorable currency trend that we mentioned earlier on. As far as Brazil in concerned, Brazil is continuing to delivering a good results, good sales, not buying it's not similar in Portugal and Colombia, but still very decent with good results in term of operating margin. If we now move to Continental Europe and Middle East Africa, we are always with a solid business momentum what I calls a network effect where we are able to attract in Europe, mainly global clients that could be U.S. but also not on U.S. that are using ongoing network effect.

So we had very good performance in the Netherlands, in Greece, in Egypt, in Russia and Poland. Of course they are not the same size all of them, but what we are experiencing is growth in all these regions. We have of course a positive impact of TLS activities on the growth of the region even it's less than it was recorded last year. If we now move to results, we are moving from 2.1%, €9 million to €25 million, 5.4% of our sales which is due to three things mainly, the fact that French-speaking [ph] market is as plan on the market ongoing improvement where profitable growth in the country that I mentioned including Greece and Russia, and also we have seen even better improvement of profitability of TLScontact that are part of European business. So as a whole, you can see that the three regions are doing well, much better for our Europe and Continental and Ibero-LATAM, but still a decent level globally.

If we now move to much more detail on the operating performance, just a quick word in mainly on this template is to explain where it has come from the 20% basis points which are in line with the annual objective. And we have non-recurring item which are roughly the same as last year that are made of amortization of intangible assets and the accounting charge linked to performance share plan that we have recorded this year, either for the best plan and for the new plant that have just has been voted early '16 – mid '16. Going down to the P&L, what we see? We see the financial results at minus €10 million versus minus €4 million last year. You have to remember that last year we have one-off positive that was reducing the cost of the financial results. We believe that we are going to swallow that in the second part of the year and coming back to a level which is now achieved around €22 million to €23 million.

More interesting is the income tax, as you can see we have been able to reduce the effective tax rate and even the tax charge. This is due to – I would say precise actions that has been taken in the past, minority interest at the same level, net profit at close to 4% and you'll find after the diluted earnings per share including as a weighted average number of shares during the period. So overall good results in term of P&L. Clearly P&L is important, but ask somebody – I know you are much more very interest also in cash and I am really happy to -- please to shows that we are able to – we have been able to increase our cash flow this year with an increase of 16% which is up to major seeing beyond increase of the business. We continue to track the working capital and to get results from our balance sheet and we have been also able to control significantly CapEx in the first half despite the growth that we are experiencing in the new sites that we are speaking of with a net free cash flow of €121 million this first half.

So what we did with this cash flow, that's something which could interest you. So we use it to pay some interest €8 million I mentioned earlier, dividend €68 million and we have €12 million in term of collection effect on that fees. But we have also financial investments for €50 million which are made mainly of the earn out that we have to pay on TLS and we brought some shares to be able during the first half to be able to serve performance share plan that was voted three years ago. So more interesting is to see that despite affect that we payout the CapEx in this first half, we have been able to maintain roughly the level of debt and that is interesting knowing that there is no dividend in second part of the year that will help us to continue to reduce our debt along a years. We just put below this templates a level of debt versus equity, as you can see there is no a reason or adept.

Not going to comment so much of balance sheet because there is no major change that you don't know and need to be highlighted, but what is interesting is a fact that this balance sheet is still always very solid and help us, and will -- may help us to move forward from strategic approach. So to finalize the presentation, I just wanted to stay a minute on the outlook. So we have changed a very few of the outlook and I'll come back in a minute to that. So we move from annual organic growth objective from 5% to 7% to plus 7% in terms of sales and that is now our commitment. We stay with the same level of margin, doesn't mean that we are worried or anxious, but we are in a complex world.

You know, all of you that the second part of the year is critical. We're happy with the first year -- first part of the year that increase by 20 basis points, so it's a sign but we have to make it in the second part of the year. And what we believe that we will continue to have a strong net free cash flow generation in the second part of the year. That's what I wanted to let you know. I'm now of course ready to answers the questions you may have and I'm sure you have.

So I let the floor to the questions now. Thank you.

Operator: Thank you. [Operator Instructions] We will now take our first question from Denis Moreau from UBS. Please go ahead your line is open.

Denis Moreau: Hello everybody. First of all congratulation for this concept of figures, very strong especially on the cash flow. Quite a piece I'd like to discuss with you, first one on the security costs. You indicated that the full year publication a step-up in security cost and mentioned an impact of 50 bps to your full year profit margin. Can you update us on that and please give details on the saving of incremental curve between H1 and H2? Secondly on cash flow, we've seen quite a nice reduction in working capital in CapEx despite an increase in sale are sustainable inside for the second half and I'm a bit curious on your full year CapEx budget with that respect? And my last question related to the earn outs for TLS that you've just mentioned, 50 million is quite a big amount.

So can you elaborate on that and perhaps say word on your expectation for the full year and perhaps give an update on the size and performance of TLS so that we can better understand the figure?

Olivier Rigaudy: Thank you Denis. Two or three things about security costs, we have announced that there will be a 50 bps along the year, so we are on line with that. It's clear that it's going to be roughly balanced between H1 and H2, it's probably a little more in EWAP world is the first half than the other region, but I don't anticipate many change from H1 to H2 perspective and I think we're going to be to match this figure. It's too early to tell, but I do believe that we are going to match this figure. As far as a sustainability of our cash flow, you are right.

We have done a significant improvement. In fact it's made up of a lot of things. We are plus and minus-ing this in term, so I'm going to give you some information. As a minus, we have two major clients that are late that have been much more late than the previous year. So we are working on them.

We are putting a huge pressure to gets the money paid, to get our bill paid, but it could have an impact which is negative. So we have been able to mitigate this impact this year with two or three things. First of all, we have been able to collect creditability on the Mexican states , which was significant that what we are looking for some months, so we got some. They are still to come, not so many, but they are still to come. As far as CapEx is concerned, I do believe we are going to learn something in the 5% figure.

I don't know exactly. So today – but I do believe there is no reason by which we could not delivers from free cash flow figure for the full year. Probably not to achieve the same figure in term of working capital that you mentioned and you see for the first half, but I do believe that we are going to continue to track our clients to make sure that we are paid on time. And I don't anticipate any agent. I am not sure we are going to increase by 16% our cash flow versus last year, but I do believe it's too early to tell, but I do believe we are going to make a stronger performance for the full year.

As far as our earn-out interest, just be clear as a €50 million that I mentioning are investment of which part is coming from TLS. There are other things. TLScontact is made of two, one amount, paid in two times, one this year and one in next year in the first half, so there is nothing to come in the second part of the year. There is nothing to happen here. They may have another part coming in the first half of 2017 based on the final 2016 figures that will be deliver this year.

So there is no more cash out on this earn-out for 2016. That shows that again – that okay, it's a big amount, but that shows us also – it shows that this business, that this activity is doing well and make sense for the group. You remember that we make this acquisition six years ago for the small one, we have been able to develop it to grow and to improve the operation margin of this business dramatically. So as all, I do believe it's a good sign and good conclusion.

Denis Moreau: What's the revenue of TLS today? Can you perhaps touch on this detail?

Olivier Rigaudy: I'm not sure the revenue for half year are fantastically interestingly.

As a whole – for the full year I do believe we are going to be beyond 130 million sales for this activity close to 130 million sales. If you remember that in 2010, it was close to 10 million.

Denis Moreau: Okay. Very good. And the other investments besides TLS in the 50 million?

Olivier Rigaudy: It was a fact that we bought some share on the markets of Teleperformance share, our own shares, own company shares -- I would say to deliver to the people that have being granted share all along these three years and there is a part which would be done by – I would say increasing capital, but also part even both in the market.

Denis Moreau: Okay. That's clear. Thank you very much.

Olivier Rigaudy: Thank you.

Operator: We will now take our next question from Christophe Chaput from Oddo.

Please go ahead, your line is open.

Christophe Chaput: Yes. Good evening. Three questions please for me. I would like to turn back on EWAP margin, saw a decline by 130 basis points.

I'm sure that is linked with security trust, could you just clarify this point? Second question is EMEA, so you post an impressive operating margin of 5.4%, [indiscernible] in the well for the full year, the mid-term target was 67%. So the question is what mid-term target you have for the margin in EMEA? And the third question is regarding Ibero-LATAM. What is the impact of currency in the starting margin on the semester please?

Olivier Rigaudy: I like your question Christophe. I'm not going to be very detail on the question one and three. Question one, it's clear that, in facts the decrease of the margin in EWAP is a mix of different things.

There is a security cost, of course which is a part of it, there is a fact that we invest dramatically in this region and I do believe that is right things to do even if it's not – I would say happening in two or three months, but that's the right thing to do. So, just for you to keep in mind that all of that is roughly, so what is interesting is to say that maybe we'll – I do believe we are going to recover a part of it in the second half, I'm not sure we are going to recover everything in the second part of the year, but that's absolutely key for us for our development. As far as EMEA is concern, clearly even the seasonality you may imagine that we are going to be above 6% this year. Remember CEMEA is made of two things; one is made of the TLS business, one is made of the other business. So the other business are not climbing at the same level as TLS.

So as a whole, we are going to achieve probably something beyond 6%, but there is still work to be done, especially country-on-country we are still – we do believe that we are going to be breakeven in France which is in satisfactory, but far from being – which is acceptable but far from being satisfactory. So, there is significant room for improvement. So you should take together all the stuff including TLS, we could push this target to more than 7%. Ibero currency is always hard to tell that, but you remember that the Colombian Pesos has declined by 30%. We never take advantage of such deliberation you have in the meantime, pressure from the customer.

You are in the mean times have the necessity to give back sometimes to the employee because you have positive inflation. So just for you to know it has an impact, it's not a major impact in the fact that Ibero-LATAM is delivering better figure. What is absolutely key is the performance of Ibero-LATAM is a Portugal, [indiscernible] and Colombia for this volume made in Colombia, that has two major things, and I strongly believe that there is no drama as we continue along the year to what level, is too tough to tell today, but I really strongly believe that we are going to deliver a good full year for Ibero-LATAM.

Christophe Chaput: Okay. Just one quick follow-up on EWAP margin, to be clear on H2 we could expect more or less a flat – almost a flat operating profit margin versus H1 2015, does it?

Olivier Rigaudy: I am speaking versus H1 and we are going to increase versus H1 to what level is -- it's tough to tell today.

But clearly we are to increase versus H1 and roughly in the range of last year.

Christophe Chaput: So H2 2015-2016 stays more or less the operating margin?

Olivier Rigaudy: Probably a little – it's too early to tell, but probably a little less, but something like that.

Christophe Chaput: Okay. Thank you very much. Thank you.

Operator: [Operator Instructions] We will now take our next question from Patrick Jousseaume from Société Générale. Please go ahead, your line is open.

Patrick Jousseaume: Good everyone Olivier.

Olivier Rigaudy: Good evening Patrick.

Patrick Jousseaume: I have a one follow-up question.

Just what is about EBITA guidance regarding organic growth? Why don't you forecast a strong organic growth with a little bit comparison in H2? Second, what about the tax rate that we should take in our model for full year? Currency, do you agree that we should have some more limited currency negative impact in H2 based on the current, let say priorities? Could you show us the impact that you see from Brexit? Could we have positive impact on TLS or negative, and on [indiscernible] as a group? And finally, there was some news this afternoon about SSR with sharp headcount reduction submitted by the management. Could you comment on that or at least some of the impact that you could have your SFR please?

Olivier Rigaudy: Okay. Sales guidance we always, you start to know us, we are careful guys. We prefer to over the levers and over premise, so again, second part of the year should be easier comps. But it has been done.

We are in the world which is – I would say difficult to predict. We have ups and down, so clearly I hope we will be able to beat this figure, but it's too early to tell. So it's much more prudence, a careful approach that is linked to the group. We'll see that at a time we are going to report our Q3 figure in mid-November, that's clearly – I hope it will be better, but let's do it. Tax rate, I think you can add for your model something close to 29 – between 28 and 0.4 or 28.5 and 29.

That makes sense for the full year. As you know there is always what it called the true-up in U.S. arriving this came up, that is coming up in the second – at the end of – mid of this fourth quarter that can change the story, but I do believe that as a 29, 28.5 figure should be okay. Currency of course, it too should be better in terms of translation, but I would say touchwood, we don't know what could happen in other country, but I do believe yes, we should see better leaner figures on that. I don't know where our worry is going to land the dollar.

It may change also, so we are very cautious on that. As far as Brexit is concerned, it's tough to say. It's probably too early to say. It doesn't hedge marginally in TLS, but it's not in term of sale versus the business, but also its allows much more volume, so it's really difficult to tell and I do believe it will have few impact, because a big business – seasonality of TLS is between May and September and most of the things are being booked in advanced, so it's may have an impact but I don't suspect there will be a huge impact on the Brexit on TLS? For our business, you know our business is mostly, I would say onshore. In U.K we have a small offshore operating in South Africa, but it's not our currency country.

So I don't suspect again any major impact, but frankly it's too early. What's going to happen in term of activity in U.K., that could have an impact, I'm sure you knows that better than me. It's funky, it's too early for us to say. As far as SFR is concerned, I know that there are decision about that and some news that has been broadcast are given to the press in the last months. I just wanted to highlight two or three things.

First of all, we have never been announced for being other guys that have lost contract with SFR, contrary to some other, so we still are very close to SFR. We still are being one of good – I would say provide for them. You have to ask them. We are helping them to reduce the cost to continue to deliver with quality because the program is not only to reduce the cost, but also to deliver quality to the client and we are here to help them to continue to gain – to regain market share with some of their customer in France. And I do believe, okay something which has to be follow closely with – I do believe we are well positioned in this field.

Patrick Jousseaume: Thank you.

Operator: [Operator Instructions] We will take our next question from Laurent Gelebart from Exane. Please go ahead, your line is open.

Laurent Gelebart: Yes. Good afternoon Olivier.

Two questions on my side. As a first one just to be correct, can you confirm that the security cost impacts in H1 was 50 bps overall for the company or more than that? And secondly, in the press release management [ph] is focusing quite a lot on M&A opportunities, so I would like to see where you are on that side and if the pipeline is full on it?

Olivier Rigaudy: So our security costs roughly is a same thing, but it's not a quite the same way by region, but it could be a little more in U.S. than it is the other zone. Take as an assumption that we'll land at 50 bps for the full year. M&A, you know that we are looking for M&A for some years, but we still are very tricky.

We still try to want to avoid any deletion either in term of multiple or either in term of financing. So I would say the size of the pipeline doesn't help to as a group to know whether we are going to make it or not. As always and I'm sure you understand that we are – I cannot comment in detail but we are looking a lot of file. I don't know whether they will be realized or not, but clearly as a whole, we are working on such activity, but we saw it was interesting to show that we have the ability to make such acquisition and we are working to do so.

Laurent Gelebart: Okay.

Thank you.

Operator: Thank you. We will now take our next question from Denis Moreau from UBS. Please go ahead, your line is open.

Denis Moreau: Again.

So, sorry. Two additional questions, the first one is on the Chinese and Indian business. Could you please give us some details on the size and profitability of those businesses today and what are the best performing verticals in this region? And secondly, you also mentioned an opening new site in Madagascar, what's the big attraction of Madagascar in your view?

Olivier Rigaudy: It's simple, Madagascar is speaking French. In the turmoil of the word that we're living, you know that we are for French speaking we're domestic French. We are in Morocco, we are in Tunisia, we are in Le Benin.

So we believe that having enough of place where people are speaking good French could be good opportunity either in term of cost, in term of security for some of our clients, that's it. So we just open, again we are – as this site is live since early July, so it's not a big stuff today, but strategically it is interesting to have again the ability to follow our client across the world. China and India, again we are highlighting this to country for now, two or three years Chinese business is going to grow – to continue to grow. We do believe that by the end of this year it should approach 100 million sales so far, could be more important. You remember – and in India it's significantly less.

You remember that in these two major countries we are – as a starter we are working for U.S. multinational in this country, whether they are technical, new economy or others electronics and we are growing rapidly with this people. Of course we'll start now to work with some new – just to start, some new Chinese company, but much more I would [indiscernible] of the company, but it's too early to comment on that. I hope we'll be able to give more information later on.

Denis Moreau: Thank you.

Olivier Rigaudy: If there is no further question, I'm going to conclude. Again, what I just wanted to highlight, we are happy with this first half which I do believe in line with your expectation. We think that we have a marvelous object which is Teleperformance. We are committed to continue to grow, but to grow and making profit and generating cash. We are ready to do that and all the team is committed to do in the next year at least to deliver the guidance that we have announced for this year.

I'm going to thank you for the interest you have for Teleperformance and I would be happy either with Quy Nguyen, our Investor Director and Investor Relation Director to comment in much more detail if you need such figures. Have a good night. Thank you bye-bye.