Transcom Q4 and Full-Year 2013 Presentation

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Information about Transcom Q4 and Full-Year 2013 Presentation
Investor Relations

Published on February 17, 2014

Author: TranscomGroup

Source: slideshare.net

13 February 2014 Transcom Fourth Quarter and Full-Year 2013 Results Presentation Johan Eriksson, President & CEO Pär Christiansen, CFO Outstanding Customer Experience

Transcom at a glance 1

What is Transcom? • A global customer experience specialist... • ...providing outsourced customer care, sales, technical support, and credit management... • ...through an extensive network of contact centers and work-at-home agents 3 ” Transcom’s business is to help make sure that our clients’ customers form positive perceptions of their interactions with them.

Transcom in numbers • 29,000 people… • …representing more than 100 nationalities • 62 contact centers, onshore, off-shore and near shore… • • • • • 4 …in 26 countries Delivering services in 33 languages... ...to over 400 clients in various industry verticals €653.2 million revenue in 2013 Market cap: SEK 1,525.8 million as at December 30, 2013. Listed on NASDAQ OMX Stockholm (TWW SDB B and TWW SDB A)

We have an extensive global footprint Domestic markets Near Shore Locations Offshore Locations  Austria  Netherlands  Slovakia  UK  Germany  Norway  Spain  Australia  Canada  Croatia  Estonia  Latvia  Czech Republic  Hungary  Lithuania  Chile*  Peru*  Colombia*  Philippines*  Tunisia 5  Czech Republic  USA  Canada  Italy  Poland  Sweden  Denmark  Portugal  Switzerland  Croatia * Developing into domestic/near shore markets

Transcom’s service portfolio enables the creation of outstanding customer experiences, while reducing cost and helping to drive growth Customer service Technical support Customer retention • Quality, accuracy, speed, • Tiered support models • Extensive product training • Resolve customer issues at • Prevent defection and efficiency and sales targets • Competitive differentiation • Reinforce buying decisions first contact and brand relationships maximize customer lifetime • Protect your revenue streams and turn potential defectors into fans Customer acquisition Cross-selling & upselling Collections • Acquire new customers • Generate new sales directly • Recover debt and cost-efficiently • Uncover customer needs, identify the right offerings, secure customer orders from existing customer base • Support complex products in day-to-day service interactions • Adept at building relationships 6 rehabilitate customers • Case management approach • In-house teams for legal processes

Transcom turnaround EBIT margin has declined since 2007, but the negative trend reversed in 2012 Revenue (€m) Operating margin* 653.2 631.8 Situation today and short-term focus • Transcom’s profitability has decreased in recent years, but is now improving • Continuous focus on underperforming areas • Growth in selected areas and efficiency improvements • Broadening client base 605.6 599.2 589.1 6.0% 560.2 4.4% 554.1 4.3% 2.7% 2.2% Market trends • Growth driven by domestic Asia Pacific and Latin America markets • Diversification (geography and business models) 1.5% 0.7% 2007 2008 2009 2010 2011 * Underlying performance, excluding restructuring and other non* Excluding non-recurring items. recurring costs 7 2012 2013 Going forward - Strategic direction • Focus on core CRM business • Creation of outstanding customer experiences, while helping clients to reduce cost and drive growth • Flexibility is critical

Our performance in Q4 2013 and FY 2013 2

Revenue in 2013 increased by 7.9% compared to 2012. Net revenue, 2013 vs. 2012 €m 653.2 Growth 605.6 56.8 2.7% CMS 55.3 North America 112.1 & Asia Pacific Iberia & Latam 119.4 122.7 130.9 9.6% 145.8 5.5% Central & South Europe 138.3 North Europe 180.4 197.0 2012 9 9.4% 2013 9.2% • All regions contribute to company • • growth Net of currency effects, growth was 8.8% (9.3% in core CRM operations) Main driver is increasing volumes with our installed client base

Revenue in Q4 2013 decreased by 1.6% compared to Q4 2012 Net revenue, Q413 vs. Q412 €m 162.9 160.2 Growth CMS 13.5 12.7 -5.9% North America & Asia Pacific 31.9 30.0 -5.8% Iberia & Latam 31.0 31.7 +2.5% Central & South Europe 35.5 36.2 +1.9% North Europe 51.0 49.5 -2.9% Q4 2012 Q4 2013 10 • Net of currency effects, growth was • • • 0.5% (1.0% in core CRM operations) Main driver is increasing volumes with our installed client base Exit of non-profitable contracts in the North region impact revenue Decrease in North America & Asia Pacific is driven by a price decrease for one client and lower volumes in North America

EBIT, excluding non-recurring items, increased by €8.7m in 2013 compared to 2012 +8.1 -5.4 -2.9 +8.9 17.6 8.9 EBIT 2012 11 Cost savings programs Volume & efficiency Expansion costs Other EBIT 2013

EBIT, excluding non-recurring items, increased by €2.3m in Q4 2013 compared to Q4 2012 +2.2 +0.1 -1.1 1.1 4.3 Expansion costs Other EBIT 2013 2.0 EBIT 2012 12 Cost savings programs Volume & efficiency

EBIT margin* increase in FY 2013 driven by improvements in Central & South Europe and CMS FY 2013 EBIT margin* North Europe Central & South Europe Iberia & Latam North America & AP CRM CMS Total * Excluding non-recurring items 2.5% 2.9% 2.8% -1.2% 1.9% 10.9% 2.7% FY 2012 3.7% -3.8% 4.6% 0.2% 1.3% 3.5% 1.5% • North Europe: Costs for closing the Norrköping site and the CRM operations in Denmark. Temporarily higher costs due to volume ramp-up in Norway and Sweden. New sites in Oslo, Norway and Umeå, Sweden increased costs. • Central & South Europe: Higher volumes, increased offshore delivery, and deconsolidation of former French subsidiary. • Iberia & Latam: Costs due to expansion in Spain and Latam, and closure of site in Valdivia, Chile. Lower volumes and efficiency in Chile. • North America & Asia Pacific: Lower volumes delivered onshore in North America, price decrease on one account. • CMS: Revenue increase and lowered production and overhead costs 13

EBIT margin* increase in Q4 2013 driven by improvements in Central & South Europe and CMS 2013 Oct-Dec EBIT margin* North Europe Central & South Europe Iberia & Latam North America & AP CRM CMS Total * Excluding non-recurring items 2012 Oct-Dec 3.3% 4.8% 3.1% -4.6% 2.0% 10.2% 2.7% 4.8% -2.9% 4.9% -2.3% 1.5% -1.2% 1.2% • North Europe: Costs for closing the Norrköping site, and temporarily higher costs due to ramp-up in Sweden and Norway • Central & South Europe: Higher volumes and increased offshore delivery, improved efficiency in Germany, and deconsolidation of former French subsidiary • Iberia & Latam: Costs due to expansion in Spain and Latam, build-up of site in Colombia, and closure of site in Valdivia, Chile. Lower volumes and efficiency in Chile. • North America & Asia Pacific: Lower volumes delivered onshore in North America, price decrease on one account. • CMS: Lowered production and overhead costs 14

We need to successfully address a number of shortand medium-term operational and financial challenges Stop the losses in France (€1m/month in 2012). Successfully resolve tax claims Lower corporate costs Increase onshore seat utilization in North America Successfully implement action plan to improve operational performance in the North region Improve operational performance in Latin America 15

What will it take for Transcom to return to historical margins? Continue improving key performance indicators • Seat utilization • Efficiency • Offshore/onshore split • Attrition Improvements on four KPIs vs. previous year Key performance driver Trend vs. Q4 2012 Q4 2013 vs. Q4 2012 Average Seat Utilization ratio Share of revenue generated offshore (22% vs. 16%) Average Efficiency ratio (billable over worked hours) n/a (positive development) Monthly staff attrition 16 (85% vs. 87%) n/a (slight decrease in attrition)

Debt & leveraging Gross debt (€ m) Net debt (€ m) Net debt/EBITDA 100.0 86.3 90.0 80.0 71.0 70.0 75.9 91.1 94.6 94.4 80.7 2.50 65.0 59.3 60.0 2.00 56.7 49.7 1.50 50.0 38.1 40.0 36.2 32.1 1.00 30.0 20.0 11.9 3.00 17.2 0.50 10.0 0.00 0.0 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 • Gross debt stable compared to the Q313 level • Net Debt decreased by €13.5m compared to the Q313 level • Net Debt/EBITDA ratio: 1.40 (1.93 in Q313) • Financial cost €1.3m (€2.0m in Q313) 17

Going forward – Transcom’s strategic direction 3

Transcom’s brand promise ” 19 Outstanding Customer Experience, driving revenue and brand loyalty

Growth opportunities and key priorities going forward Growth opportunities Key priorities North America and Asia Pacific Short-term focus • Continue expanding in local markets in • Executing turnaround in Asia Pacific • Expand onshore volumes in North America underperforming areas • Revenue expansion and efficiency improvements • Quality and service delivery Latin America • Serving domestic markets and the US, in addition to Spanish clients North Europe • Leverage strong position in home market Central Europe • Primarily near shore opportunities • Strong capability in expanding Eastern European markets 20 Medium-to long-term priorities • Grow revenue at least in line with overall market growth in the markets where we choose to compete • Improve profitability and decrease earnings volatility - - Continuously strengthen operational efficiency Optimizing our geographic delivery mix Focus on broadening our client base

Welcome to Transcom’s mid-quarter and CSR update on March 5 in Stockholm, for investors, equity analysts, ESG analysts and journalists • Update on Transcom’s performance and important focus areas going • • • 21 forward, including the company’s CSR activities, which form an integral part of our day-to-day business activities Ethos International will present the results from our recent stakeholder dialogues 12:00-13:30 lunch meeting at Summit, Hitechbuilding, Sveavägen 9, Stockholm, floor 17 R.S.V.P. to Frida Åsander by March 3, 2014: Email frida.asander@transcom.com or call +46 73 964 33 03

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