Teleperformance SE

Daniel Julien - Chairman Paulo César - CEO, President of the Executive Committee Olivier Rigaudy - CFO

Denis Moreau - UBS Securities Mourad Lhamidi - Main First Patrick Jousseaume - Société Générale David Cerdan - Kepler Cheuvreux Nicolas Gindre - Exane Pierre Bucaille - BPI

Ladies and gentlemen, good morning, [Foreign Language].

Well, I'll be doing it in English. I would like to apologize to those, who only speak French.

Well, I apologize to those who speak French that we'll actually be speaking in English to be more precise. Since my English is very much like French and I believe they can understand anyway.

Already 2014 results that show strong activity from Teleperformance. So I'm not going to be long, in my introduction and we're going to try to be very effective in the presentation to be more able to answer your questions, if you have any.

In 2014, I think we strengthened our global leadership. First in terms of organic growth, it has been extremely strong.

I think we are the company the large company in our business that had from far the highest level of organic growth in absolute value and in percentage. Today, we are very diversified group by vertical and that's the most important thing for us.

I mean, yes we still work a lot with the telecommunication, but we work a lot with other vertical like healthcare, insurance healthcare, like transportation and leisure, like IT. So the group has become very diversified.

I think that we did a very rational acquisition during the year 2014, by acquiring Aegis USA. Basically there was a carve out made with Aegis for the US business that was operated in the Philippines, US Domestic and little bit Costa Rica and this is what we acquired.

It was a business non-redundant for the best majority was Teleperformance business. In terms of clients, in terms of vertical and it is an healthy business.

The integration so far, is pretty seamless and we do not foresee any specific issue in the future. so, when a lot of companies when they acquire business this size struggle quite a lot, with cultural differences or to adjust the business model in our case.

I think this is the most of it is right now behind us, when we made this acquisition something like six months ago. The second point that is very important for Teleperformance and it's not a quarter-per-quarter.

It's a rational process that we decided something like 18 months ago. We are transitioning very smoothly the leadership of the company to a younger generation of management and at all level, I mean at the leadership of the region, at the leadership in the specific countries.

So as to have a full line of experiment and managers coming from Teleperformance by the way, better full line of guys of people who are between 37 to 50, with an average probably around 43, 44 of people who are able to carry the future. And finally to give a little bit of perspective on our market, we think that we have a lot of opportunities and have some challenge.

The lot of opportunities that we have, is exponential growth of the one-to-one communication. I mean everyone is always communicating with another right now.

By the way, it's always impossible to understand how the human being has been able to live with our a smartphone so far. And we love that because I mean, the more they communicate, the more they're misunderstanding in the communication and we are here to solve the misunderstanding.

More seriously, what is our business, what is our mission? To take the phrase of a famous large bank in the past all over the world, all around the clock.

The city never sleep, is not exactly that, but all around the world, all around the clock we have people interacting with other people, helping them to address their day-to-day issue, whether it's administrative issue, whether it's issues with the product, whether it's just information and that's why we are. It's impossible to the global connected world today to live without people like us.

Since explain why, our market is continuing to grow by an average of plus 5%. The vision we have of course, there are multiple way of communication, multiple channel of communication, not everything is voice.

We go more and more omnichannel, where the social media will - the chat, with mails and so the vision is that, it's not only multichannel, it's omnichannel because you have to be able to communicate with one tool or another in a seamless way in order for the customer and not to have to repeat each time, its identity, its specifics and stuff like that. To do that, we try to bring tools or process that help us to be more efficient addressing this change.

This is how we created the customer experience lab, which is an observatory of the social media activities and the brand and this is, it helps us and it helps our client to better follow the trend on the spot that are going on in the social media, since its present in central location in Lisbon, Portugal. We developed e-Performance which is a way to analyze and interact with the social media, which is still a small part of our business, but you know it's things like that tend to be like the fire that start in a place, at the beginning it is very slow, you ask yourself, if it makes sense from a business point of view and suddenly it goes all across the valleys and the plain.

We are doing that for example with the chat, which is becoming a significant part of our activities with thousands of people. In the center of that, what we have developed and it's not this year, but I will say this year is the full release all over the world is our CRM system, Teleperformance CRM system, which we call Teleperformance client that is already in place with many clients from very different type of industry in the banks, in the airlines company, in the FMCG business, in the retail business and Teleperformance client is a strong differentiator for Teleperformance because it is very system that integrates any kind of interaction, a customer with a brand or a company.

That's for all the positive of the vision. Now you know, we are not living in heaven otherwise we wouldn't know it and we would all be angels.

So as we are not all angels, we have some challenges. What are these challenges?

It's very simple we have seen in 2014 an explosion of data security breaches. I'm not going to mention all the brand that have been exposed by The Wall Street Journal for example some of them maybe our clients.

So but since it's creating a challenge, why because obviously the call centers where we have an army if we speak about Teleperformance of almost 200,000 people is a place that may become a weakest link in the chain of security because at this specific place confidential information meet people. So we have seen that at Teleperformance and at as well as our competitor have seen that and since it's something on which we have been working a lot and I would say, they will be in our industry a pre-2014 and an after 2014.

Exactly like in the travel industry, there has been a pre-September 2011 and an after September 2011. I can tell you that, few months ago you would come to our centers.

You would be welcomed, you could take pictures with your smartphone and I mean it was civilized open world. You come now to our call centers.

You are going to be greeted by metal detector. We are going to remove, even if you are a client or a leader of Teleperformance.

Your pen, your phone, everything is going to go a locker. You're going to go through different point and you're going to see our people working without their personal belongings their clothes or whatever that are in the locker.

With a clean desk policy meaning absolutely nothing. Why?

Because this enforcement of the discipline and this military policy is absolutely necessary to face the acts of terrorism that exists today, right now all of us at world, you have guys, bad guys. Who tried to connect the agents of the call center, who work in call center by Facebook or by whatever and offer a very significant of money for obtaining confidential information about customers of clients.

You have smart guys that always try to penetrate the protected system of our clients to comprise data. So it's a new world, it's not a world that we would have love to be in, but we're addressing it.

We are addressing it and in fact, in doing this job. I think, we do our job as leaders.

So, this is a snapshot of Teleperformance. The last point that I would like to say is, at the end of the day we can say, whatever about Teleperformance, but Teleperformance is like an army.

We manage 185,000 people all over the world. We need this army to be enthusiastic that's why we need to give a lot of care, but we need this army to be extremely disciplined in its way to act.

This are the process and we need to make sure that we are very consistent and so it requires an obsessional in the field management. What does it mean?

If you're a big retail chain, you will never understand a management of a big retail chain that doesn't spend its time in its stores. For us it's exactly the same.

The way to manage and the way to be successful in our business to have the top management in the field not to just report of what's happening and so and so, but to be in the field because this is where we are, more active, more reactive, more proactive, more flexible and better than the completion. So very simple recipe.

Thank you and I'm going to give the word to PC.

Good morning, I'm not so sure, if the recipe is very simple. It's very challenging business.

It's a day-to-day fight and there are, I would say two words that would represent very much our business. The first one is passion and the second one is obsession.

So why? It's simple.

If you're not passionate about that, better to leave. Better to leave right away because this is not a place for, I would say people that, it's just here for okay.

I'm here just for time being, then I'm going to leave and I'm going to do a career in another company. So they cannot hide themselves behind their desks.

So it's really impossible to manage this business, this way. So you have to be passionate and the second thing is that, you have to be obsessional because if you're not obsessional and I use an expression that I'm not sure that everybody is going to understand, but it's like to try to dry an ice.

It's impossible. So you have to try and to continuously do it every single second because if you stop it.

I mean, you're done. It's a very demanding business and you have to be passionate and obsessional to be successful and having said that, we had a great year really, we had a great year.

So while our, annual revenues reach at $2.8 billion and we had like-for-like growth almost of 10% reaching our guidance after Aegis acquisition 9.7% EBITDA. And our diluted earnings per share went up by 15.4% and we are going to submit to the next shareholders meeting.

The same payout that we had last year that it was 35% ratio reflecting our €0.02 per share. So I'm not going to just repeat what is in the chart, but you can see the evolution of our figures from 2012 to 2014.

And as said, a great year but it demands a lot of fight. So this is snapshot, the new what we call the new credentials of the Teleperformance is almost 200,000 people; 135,000 workstation, 62 countries, so we jump at 16 new countries 33,000 new members of the family just in 2014.

So can you imagine to hire 33 new employees on top of our usual attrition rate. So if you're not passionate and if you're not obsessional about that, so it really doesn't make the things, so easy.

So the English-speaking-market the EWAP world was the biggest engine of growth of the group. And being benefitted as well by Aegis acquisition and in 2015 EWAP world should represent 50% of our business.

Okay, 50% of our business. So and this is the you can see in the other chart, the split between domestic and offshore or nearshore and the growth in 2014, was mainly due to the Aegis acquisition because it was very much focused, the piece of business that we acquire from Aegis was very much focused on the offshore service.

Very interesting thing to point out as well and Daniel already mentioned, is that the jump from 49% to 60% of the business not representing Telco or Pay TV. So today, we have Teleperformance is the leader in this field and has the most diversified client portfolio.

This is a super advantage for us and the trend for 2015 is even more to diversify our client basis through organic growth and through acquisitions, but acquisition not buying more of the same, but buying complementary business. So very interesting point, now if you take our top first client in 2007, it represented 10% and now is less than 7% and our top clients in 2014.

It went down from 38% to 34% and our client base went up from 700 clients to 750 plus 750 clients all over the world and the average tenure of those clients is between 10 years to 12 years. So what does it mean?

It means that, we have to provide good service otherwise, they don't stay with us. So having those clients with Teleperformance for between 10 years to 12 years, it a good, I would say stamp that we are ahead of the market.

We fight always to bring added value to the clients to bring new offers, to bring innovation to their stickiness to our brand. I'm not going to read all their words, but one more time.

In 2014, our company was the most awarded company in this field and I would like to point out. One, specific award or I would say, stamp that is the great place to work and that initiative I mean to take good care of the people, it's part of the DNA of Teleperformance with 200,000 people if you don't take good care of them, it can be a very disastrous, I would say catastrophe, if I may say that.

So and to be part or to be among the best companies to work for, in this field very demanding job is really such an achievement and we jump it from four companies to 22 companies all over our network that are among the best companies to work for in their own countries. So I don't know if you have the sense on what is to work, behind the line.

I would say, behind the phones answering issues, demand of not so, I would say, how can I say that? Polite or nice conversations, but very stressful and demanding conversations and at the same time, for those guys to be happy to elect Teleperformance as one of the best companies to work for in the country competing with banks, retail stores, competing in whatever market that you imagine.

So it's really an achievement and the people culture is another obsession of Teleperformance. So having said that, I pass the word to Olivier to explore a little bit more the results of Teleperformance in-depth.

Good morning to everybody. I'm going to present you in much more detail the result before coming back to PC and have a word on the strategy.

So first things to notice, 2014 is again in the continuity of the previous year, with a continuing positive momentum, just to point to notice at the very start that the US Dollar is still flat compared to last year, which could be surprising given what happened all along the year, but as an average. The US Dollar is flat from versus last year.

So revenue €2,758 million which is 13.3% increase on a reported basis 9.9% that has been mentioned earlier on with either PC and Daniel. The EBITDA is growing much more 15.7%, €376 million which is close to 14% rate versus sales.

The EBITDA is now 9.7%, 40 basis point much more over last year, which is 18.2% increase. Operating profit €237 million, sorry 20% and we come after to the net profit and the diluted earnings per share climbing by themselves 16% and 15%.

So a great achievement in 2014 compared to the previous year which already was an improvement over the previous year before. So a continuing positive momentum.

Let's have a look now in detail to the revenue growth. First of all, we have as like-for-like growth is 9.9%, just €235 million increase in this year, just to give you idea, which is huge on top of that, we had net negative effect on the currency €58 million which was essentially driven by the weakening of the Brazilian Real, the Argentinean Pesos, the Colombian Pesos against the Euro.

It's a major apart, just for you to remember in at the end of first half. The FX effect was close to €100 million.

So it gives you a swing the idea of the swing that happened in the second part of the year. Once we've seen that, you have to add the scope effect.

You remember that we consolidated Aegis starting 7 August and CPT the small acquisitions we made in UK, 1 July. So that's where we are landing €2,758 million sorry.

We just put below something that could interest you not only for 2014, but for the future. You see that the Dollar now is closed to 40% of our sales.

Sales denominated in dollar are now close to 40% and remember that is figures at the end of 2014 that don't take in account full year of Aegis. So the impact will be probably higher not probably surely higher in 2015 again.

Let's move to the growth by region. Of course the 7.3% increase is done differently, you have a huge increase of EWAP zone 27.7% mainly due to the acquisition but not only because the like-for-like amount to 12.5%.

So now the English-speaking world is more than €1.2 billion compared to the €2.7 billion of the group. Ibero-LATAM as reported figure are roughly flat given the decrease of the currency just mentioned Brazilian Real, Colombian Pesos and Mexican Pesos, but a like-for-like which is now close to 7%.

Remember again, there was some figures [ph] about you in the first half where Ibero-LATAM was declining on the like-for-like basis. We told you that we will be back on three months back on the road in the second part of the year.

It's exactly what happened and now achieving a figure which is close to 7% much more in line with what we have known in the past. Continental Europe 7.6%, 9.5% on the like-for-like basis.

I just wanted to remind you that, here you have a significant part of the growth which is coming from the TLS business which is here in this business that has driven the growth starting March last year. So finally, 13.3% reported 9.9% like-for-like again significantly ahead of the market and significantly ahead of the competitor too.

So let's move to the region-by-region. Again what we can say about the EWAP world like-for-like 12.5% again we have the impact for Aegis and City Park in the acquisition.

The impact of the acquisition of Aegis and City Park in the figure, but the like-for-like is really strong with essentially driven by new client especially in healthcare, we mentioned it since now some months and we achieve it in 2014, but also in insurance industry and we have very good performance on the farming [ph] side, with clients that we worked for some years now that continue to give us that confidence and increase the volume with us. Again just to mention that the China business is continued to grow at a rapid pace and driven by business with global accounts.

As far as recurring EBITDA is mentioned, you see that we overcome again the double-digit figure we were at 10% last year, we are now at 11.2% with the figure which is €135 million. Which has to be compared, remember to the total figure of €267 million for the Group, that means that this part of the Group is absolutely major crucial to the result of the group and we have some positive effect?

Coming to the Ibero-LATAM world again limited growth on a reported basis given the currency effect that I mentioned a minute ago, that the like-for-like growth which is 6.8%, which has been mainly driven by our nearshore activity in Dominican Republican, El Salvador, but also with multilingual hub activities in Portugal. All of you are familiar with this story.

We are continuing to take advantage of this specific positioning and impact that are very interesting with our client and we get traction from that again and again. So margin is a little decline, but still at a good level double-digit figure.

We have a negative currency impact to remember about the Brazilian Real, but we're still having a double-digit figure on this side, on this part of the group. Coming now to Continental Europe, the like-for-like growth as I just mentioned in 9.5%.

We had solid business gain with global client notably in the Netherland in Eastern Europe, which could be surprising and Southern Europe. Again, I just wanted to highlight the fact that significant part of this growth is coming from the fast development in the business in TLScontact either for all the business that we had and we open a new site in Poland to serve the German market to start grow east for the Western countries.

Recurring EBITDA is moving slowly to a better figure and we move from 1.8 to 2.2 and has to be significantly upgrade in the future. So now coming to the difference between the EBITDA and the EBIT which is something which is looked precisely by you in detail and I understand why.

We have had last year €30 million difference between the EBITDA and the EBIT. First of all, you have the amortization of the intangible assets which are linked to increase is mainly linked to the fact that we integrate now Aegis and we have amortize €6 million of Aegis on that it's going to be, it's a non-cash charges, but has to be done like the previous year.

So this figure will increase in 2015 on a full year basis. I just wanted to mention it right now.

If we come to the non-recurring item €15 million versus €18 million last year again you have the performance plan provision which is a non-cash again provision which has been made to cover, if we achieve that by the end of 2015, the performance plan criteria in 2013. And we have the real cash, non-recurring charges which is €8 million versus €8 million last year.

if you go in detail of this €8 million, you have roughly two part, €4 million which has been paid on a non-recurring basis for the acquisition that we made essentially Aegis, we had some fees linked to the acquisition on the legal part essentially and €4 million which are purely non-recurring extraordinary charges of which €2 million were already booked in the first half, if you remember. So you have €2 million more in the second part of the year.

Finally, we land to an operating profit at €237 million, which is a close to 21% increase, that's just last year. Let's move now to the bottom, financial results which is €12 million increase, it's due to two things.

So first of all, first things now we have indebtedness remember we are cash rich all around 2013, now since August, we have raised some debt to pay Aegis. So you have in this amount, two things.

The cost of the set about these debt and the cost of the financial charge offs, financial charges just for you to remember for your models and for the future. Here you have only, five months of charges for Aegis because we took the debt earlier.

So we will have much more financial charge all along the year in 2014, but without cost of set up this debt. Income tax, we have been able to reduce a little to 30.5%.

We will work on that again. Lastly work to be done, but I'm not sure that we'll be able to go below dramatically below the 30% that we are reporting today.

Minority interest just €2 million it's linked to some business that at overseas that are performing well. So finally, we are reaching €150 million net profit which is a 16.4% increase and diluted earnings per share of €15.4.

Let's go to the cash because I know you have some interrogation about that, some question about that. I'm going to try to explain you what happened.

So we have this tremendous increase in the cash flow from €236 million to €315 million and we have two effects this year that impact through our net free cash flow. First of all the change in working capital, you remember that we decided and I've mentioned it earlier since the acquisition that we decide to stop to interrupt the factoring program that Aegis was worked, while it was doing by the past.

We estimated that the impact of this factoring program was €50 million, why would it that, just to be clear. As the factoring program that Aegis was conducting was as a cost between 4% and 5% on a short-term in dollar on the short-term financing.

Given the level of the credit of this group, it was clearly not acceptable. So we decide to stop it.

We are working on that, on that things to reduce it. We'll come back in a minute to that, but we believe that was a right timing to do such a move.

Secondly, net capital expenditure as you see, we are close to €160 million, 5.7% of the sales is probably the highest point, that we never achieved. Not only we are growing and it has been mentioned by either PC and Daniel in the Philippines and in US, but we are two things which we are exceptional this year.

First of all, the fact that we invest and I'm sure you remember in the TLS business dramatically starting March. The cost of, the impact of this acquisition is €20 million, this is an one-time investment for the next nine years, that would be so to put in place new countries that we have opened in different countries in Europe and in Africa and we decided also to use all cash in Argentina to protect all cash by buying a building in Argentina to secure cash and to offer possibility to people to have a secure place.

So if you took out these two things €20 million and €3.5 million, you have €23.5 million capex exceptional. On top of that, you have a €50 million impact of the Aegis acquisition.

If you sum up this two figure to the net free cash flow. We are close to €110 million, €120 million free cash flow under recurring basis.

So that's the figure I want you to keep in mind. Just to forward, what's happening.

So again, more debts than what you probably thought, it's given to that, but finally the net cash was €87 million at the beginning of this year. We have a free cash flow so change in working capital that we just saw a minute ago.

So net capex, the net investment that we did in buying Aegis and CPT. So dividend that we paid and also item, which are essentially a fixed impact given the level of the dollar at the end of the year versus your average dollar.

So we landed about net debt of €423 million which is compared to the equity quite low and especially when you compare to the EBITDA, we are at €1.1 million which is probably the highest point that we will achieve over the last year and the next year, but that's clearly a low level that is absolutely affordable by the group. Just for you to know, to remember that how we finance the group, the acquisition.

We decided to long lengthen maturity to use dollar and to secure the financing of the group by raising a US product placement program on the seven years and 10 years duration, just to secure the financing of the group. We had some term loan shorter and we have our credit line.

So that means that the liquidity of the group is clearly not an issue, we have structure of the duration of the different loan and when they lend it by bank on the clear ways that will be able to be repaid on an easy way in the coming years. I'm not going to spend a long time on the balance sheet as you can see, it's increasing dramatically, but nothing which has to be mention.

The only thing and I just wanted to show you is the policy that the group is following since now four years, five years on the dividend policy. Not only we have increase of result, but we have increased the payout to a level which seems to be a recurring one, which is 35% which give a good return to the shareholder.

And now I go over back to PC on the strategic issues.

Okay, so few words about our Aegis integration. So before we acquire the company, we had a game plan.

So at the moment that we announce that the company would come to Teleperformance family in the very first day, we were there in the field with people. So people were, I mean we reduce it completely the anxiety of the people, so we are following up them very closely.

We've been there, I would say two months ago. We are going to go there very soon.

I mean, when we say, "we" that means myself and Daniel because I mean the people that are managing the company are with them in the day-to-day basis. So excellent integration, excellent acquisition, excellent people.

So very good, I would say addition to the family. Talking a little bit about the guidance for Olivier.

Talking a little bit about the guidance for 2015 as already mentioned by Daniel, this according to IDC grows in an average ratio of 5% to 6% and I just would like to point out, one thing that it's very much in the mind of the people that really thinks that. Okay, so other kinds of channels are going to take the place of the telephone, so it can be the case, but so far the telephone is still growing and other channels are coming and we are increasing the numbers of contacts, okay just for you to have a mind.

What does it mean, it's an opportunity for Teleperformance to grow in different channels and to still keep growing in the voice channel, that doesn't mean that the voice channel grows in the same percentage than other channel, so I wouldn't be, I would say stupid to say that. The other channels grow, I mean much more than the voice channel, but still the voice channel grows in I would say, a sustainable path, so far.

So this market today is almost today is almost €60 billion market and by 2018 it's going to be €67 billion market, just the outsourcing market, but if you take into consideration that, an average of I would say 25% of this market is outsourced, what does it mean? It means that we still have a big green field in front of us.

A big green field, a lot of opportunities and we have our people in place, our process is in place, in order to grab these in house market. So there is a huge opportunity in front of us to grow in this field.

There are some markets for example that these ratios that you see here 25:75 is 95% in-house and 5% outsourced. So it's like to sell I would say slippers in a place that everybody walks in barefoot.

So sometimes, people go there say okay, so how am I going to sell slippers here if they're in barefoot because they're not going to wear slippers, but we see differently. We see a huge opportunity in front of us, to sell slippers for people that is barefoot.

Okay, this is the snapshot of the competition. Still a very fragmented market.

Teleperformance has a 7% market share. I think the consolidation is on its path and just one thing, I really would like to point out and to call for your attention that Teleperformance is the only and truly multinational company in this field.

Only and truly multinational company in this field, what does it mean for our global clients? Standardization, seamless process, advantages to talk to one person instead of multiple persons or multiple people.

So it's another big advantage of Teleperformance. If you see our competitors, they are either American companies, Spanish companies, Brazilian companies, but Teleperformance is present in 62 countries and remember that we added a lot of countries in 2014 and we are going to open more in 2015 and so wait for the news.

So it's really, really I see is as a super advantage for us. So our objectives, our strategic objectives they are the same.

We don't change, so our focus is on our biggest engine of growth that is North America, true new verticals remember. We are not going to acquire more of the same and in every single opportunity in the changing value of the customer with the brands, we can play a very important role.

So those are our three pillars, our three is strategic pillars that is going to drive, that they're going to drive our future. So finally, before opening to the Q&A.

we are aiming to have a growth like-for-like of 7% and recurring EBITDA margin of at least 10.3% for the 2015. So thank you and now I'm going to open for the questions-and-answers.

Denis Moreau, UBS. I've three questions please.

So first one is on Continental Europe. As we've seen a pretty stable profit margin last year at 2%.

Can you give some details on the evolution in Continental Europe what was the contribution of TLS in terms of revenues and profits, what was the evolution of the losses in France? Second question regarding your guidance for 2015 at least 7% organic growth.

What are the assumptions behind these guidance by region, by language. If I may say, so far for Europe in particular.

How growth do you expect and sure of course a question for Brazil and Ibero-LATAM? Do you expect to slow down there, honoured, very good.

And last question, China I've been quite interested on this topic, what's the size of this business, what kind of clients do you have in China domestic or international and what's the outlook for 2015 as well for this country?

I'm going to start on Central Europe and I'm going to give you a snapshot on China and PC and Olivier are going to give you all the answer you want about the margin and the details of the margin.

Not all of that.

It's going to be quick.

So let's be clear, Europe is right now the ugly little duck in the pound. Not only for Teleperformance, but for all the company that work in our sector.

When you make an analysis of their last year results. You will see that everyone is suffering in Europe.

I would say the less you have in Europe, the better it is. Why?

And there are at least two reasons. Europe present a very quiet no economic dynamic and on top of that.

Europe is some kind of outsourcing adverse by its lack of flexibility in terms of labor laws. You know that, when a company outsource, the very first thing that the company is looking for is for flexibility because there are peaks and valley in the activity of a company and when suddenly you face totally rigid environment, it mean that the outsourcer that has taken the business if there is bad turn of the business is stuck with heavy cost that he cannot adjust with.

So the - you were speaking about TLS. TLS has been a year of growth, I mean sorry new business of TLS is that has been the source of the growth in Europe, has been not extremely profitable in its first year, which is absolutely normal because it's implementation year and we were expecting business growth, but not huge profitability of these kind of contract, which is a long-term contract and the profitability comes when everything is in place, not when you're putting at the same time.

The premises, the people, when you're adjusting the people you put to the exact volumes and stuff like that. On top of that, it has been some operational surprises that nobody could foresee before which has been the unfortunate war between civil war in Ukraine and the implication of Russia and so the flow of visa coming from Russia to UK which is very major flow normally has dried up.

Let's see, I mean this is the erratic world in which we live. Now you were asking about France.

France is a kind of long recurring story. Theoretically because we are very cautious with that, but we should have the moment of truth in the France recovery in the coming months.

I mean, I would and the first half of 2015. So what to tell you, a management is in place, action plans are in place, the game plan looks credible.

So yes, we are expecting that, but it's not necessarily now a guidance, but yes we're expecting that little by little, the burden of France is going to disappear to just be a normal country like the other, that's for your question in Europe. Now for China, we are growing in China.

We are profitable in China and we're profitable in China, because we accompany our multinational clients. We do not work with Chinese domestic companies that have generally a total different strategy regarding the management of the people, but China we started in Beijing with one center, now we have two center in Beijing, than we started in Xian in Shaanxi with one center, now we're opening the second center and we're going to open our fifth center in China, in the South of China in the coming months.

Just to tell you that there is an excellent dynamic. Okay.

So regarding the assumptions, per region. I cannot share with you obviously, I mean what are the assumptions per region, but the assumptions that we do are a budget are common assumptions on like the ones that we get our clients, we have our forecast with our clients, we forecast the growth of our clients, we have our pipelines, what would be the growth for the future by client, by region.

So US can specifically about Brazil and I remember that, one year ago that question was raised and we answered that Brazil was going to be back to growth in the second semester and I'm talking about Teleperformance Brazil, not Brazil in itself. So that was the case, so we were able to get another clients in Brazil, another prospects and we were able to grow with actual clients and foreseeing growth for Brazil in 2015.

If I may add, Denis we're not betting on the huge growth in Europe in 2015.

Yes and Mourad from Main First. I have a question on your margin guidance.

The margin increase that you have in your guidance, I mean which parts comes from the accretion from Aegis and which part comes from the underlying improvement in the business because when I look at it, my best guess is that you only include Aegis and you don't have an underlying improvement, you don't have the dollar. Another question, sorry on the Forex impact.

At last part is, what would the positive impact from your margins from the Forex environment?

You know there is one thing that we know, when we give a guidance at the beginning of a year, is that we know, what we know and we don't know, what we don't know. What does it mean?

But it's very important and in fact and we know what we don't know. It's not we don't know, what we don't.

We know what we don't know and what is it? Is the fact that, whatever you can plan, forecast, be super good in the like for detail of your approach in your business.

Every year, you're going to face an unknown and this unknown is going to be pretty ugly. I'm not speaking about good news or whatever, but you're going to face kind of difficulties.

Country difficulties, client difficulties, operational difficulties or whatever. Since it is our guidance, I'll make, of course, if you want us to make the sum of all what we could do, we could give you a total difference guidance and then you would kill us at the end of the year.

Why would we do that? Right now, according the paradigm that we have in our business, it's a reasonable guidance and I think it's not so bad to have a guidance that give an improvement of 60 basis point in the EBITDA level.

Yes, one more point to add on top of Daniel's comment. You cannot just take the upsize and not to consider the potential downfalls that we're going to have, so this is, this business is very fluid, very fluid and as he said and we always say that internally, we know that S is going to happen.

If you know what I mean, S. no, okay.

Troubles, troubles.

No, at least we have a paradigm because I think that we do, a pretty decent job at forecasting over the years because for decades in a very fluid environment we tend to give guidance that are pretty realistic sometimes, we have one little bit more in results. Sometimes, we can be a little bit short and every start to manifest anxiety that's the reason.

I mean, we try to be a safe bet. We do not encourage any of the financial analysts who follow us to even think that we are conservative and that they could forecast higher than what we say, if they do that it's their responsibility.

We are here to grow a company, to propose creational value and somehow we commit ourselves to the number that we gave, so it's not a game for us.

Yes, just to make it tangible for us, when I was talking about troubles. Troubles can be for example, we serve some specific client and the client forecast for example to sell X million of devices and all of us sell them, their forecast is not accomplished, but they've told us that they would sell that number of devices.

So if we would have put the total number of devices in our forecast and if this forecast was not achieved, so what do we do.

It means that our specific wisdom should be better than the cumulated wisdom of all our clients.

And you have the issues that you can predict Daniel was speaking, the Russia issue, a minute ago, I don't know what could happen to this year, we are just starting the year.

Patrick Jousseaume, Société Générale. For growth was lower than Q3, very recent of course but lower than Q3 and there no growth in Europe.

So could you come back to that for us. Second question is about let's say normalized free cash flow, could you give us your view about normalized Capex to sales and normalized working capital to sales.

Third question financial charges, could you give us a split between financial cost and the cost to set up the new debt and finally regarding your comments on France. I didn't understand what you expect exactly for the end of H1, is it let's say return to positive growth or is it breakeven, I did not catch it.

Okay, coming to France what Daniel had in mind at that time, is to show that we may at that time, I don't whether it's May, June or something like that showing inversion of the trend of the sales volume. There is no way by which we can be at breakeven about each one, just to be clear.

Financial charges, I'm not going to give you the split because our friend bankers are going to --who are present in this call would be surprised, but maybe you can have an idea that financial charge for 2015 will be as whole year equal to what we're going to, what we've established in 2014 something which is €80 million, €90 million with FX impacts which is hard to predict. Free cash flow, what is clear is that, next year and this year sorry we will have less Capex, we anticipated something in the range of €150 million Capex to sales which are significant higher than what we did in 2014.

Working capital, we are going to work on that drastically. We are committed to reduce that especially since coming from the Aegis origin.

I do believe that today, the free cash flow foreseeable today and again I'm taking also cautious approach that we can make - will be something in the range of €100 million and €110 million next year provided we achieve to do so, to the results that we have and given, we achieved is a different thing that we wanted to do at working capital level. And as far as Q4 growth is concerned, I'm not sure that it could be a surprise for you, but clearly the TLS has slowdown in Q4.

We knew that Q4 will be slower, the main question is to see what will be the growth in 2015 for Europe and as mentioned by Daniel a minute ago, it's clear that you cannot bet on a huge growth in 2015 in Europe. The only question what is in Europe is not really the growth, it's much more the EBITDA ratio and we're much more working on that.

And frankly there is no way by which we can increase the sales with limiting, with reducing or staying with the same level of results. The main topics is to have clients which are profitable much more than to have clients at all.

So there is no way by which you can bet on the 2015 growth, major 2015 growth in Europe. It doesn't change our final guidance that we made on sales.

Basically, we're sure that right now and for the years to come the source of an energy and success of the group is US market, we can say the English-speaking world, we can say whatever we want, but at the end of the day. What right structure of this group, is how do we perform on the US market.

The rest exists, but this is where everything is at stake. Then there is something that I would like to say is, the - we're a global company, so we work with in the real life with clients that are in different region of the world and some of this region of the world and quiet a lot are not doing specifically well, in this macroeconomics.

So there is a big difference by the way I would say between the disciplined country in terms of terms of payments in practice the non-disciplined countries in terms of payment and practice. I've seen that you know that very well in Europe, when I read the debate you have right now between Germany and Greece.

It's the same at our level, so guess what happened the fact that, we it's beside all our activity we have to fight more and more to maintain our DSO. It's a struggle with some companies in some countries to have them respecting the contract term.

Even if Teleperformance works mostly with what you would call blue chip companies. So I'm afraid for that people, who do not work blue chip companies, but even blue chip companies.

I mean the financial department of some blue chip companies do not necessarily have the best possible behaviour and guess what even the banks do not have the best possible behaviour.

David Cerdan, Kepler Cheuvreux. I have a few questions for you.

First is France, sorry but. just to be sure to understand what you said, what do you expect for France in 2015 in term of revenue growth and EBIT margin and when you do expect for breakeven to be at reached.

Second question is regarding M&A, what is your how do you see M&A activity in 2015 and maybe 2016? Do you target some big fishes or small ones?

And what is the leverage you agreed to have in your balance sheet and last question is regarding your business. I think that there is a decline of a revenue with telecom and Pay TV operators.

Is it related to some operation, some mergers in some countries like in the US or in France and how do you allocate your capacities between telecoms and non-telecom operator. In other words, do you have a yield management offshore capacity now?

So France is very simple, what I said. We are going to have a moment of truth because we are going to see, if during this first half, if we have an inversion the sales curve.

So if we start to grow again from the precedent year after having seen a decline in the sales in France that is extremely exposed to the telecom and you know better than I know, how are the situation of the telecom market in France is pretty complex, right now. How many operators are we going to have at the end of the day?

What's going to happen in the term of consolidation? What is going to be the policy of the new owner of SFR and we work with the four operators.

So in any case, somehow our destiny in France depends very much on the life of the telecom market. We try to get a better diversification.

We have an internal plan in mind to come back to breakeven shortly. I would say between 2016 and 2017, but we had so many plans before to breakeven before 2014 and 2015 between that I don't want to commit anything.

We live with our, France is part of our global system. Right now, we get more multinational clients in France that we like and we leave with that expecting that is going to stop to be a burden in a pretty short-term.

We have changed a lot of things in France, but it's not so easy situation unfortunately today France represent I don't know, 3% or 4% of Teleperformance. So if you don't mind now, we can speak about 97% of Teleperformance.

So our policy for M&A is very clear. We have said it, everywhere.

First, we are not obsessed by size. Super-size mean it's not for us.

We are obsessed by creating value. We know pretty well this business, for have been being born in this business all of us, at least two of us.

And strategy is very simple. We only want to buy complimentary business by vertical client that we do not have vertical in which we are not strong enough.

A practice in which we're not strong enough and we're in flexible countries. So we are very interested with Europe right now and if you speak about flexible countries, you speak about the USA.

And we do not want to buy people who have a business model that would be dilutive to our ratio because we know that, it's already difficult for us to fix the trouble we have in our own family. It's not to inherit the trouble created by the other.

So we are very interested in basically in company that have profitability ratio that are not at our level. We are ready to pay companies, but we want good companies.

Once I have defined that, anybody who has interesting companies corresponding to this profile, you're welcome to call us and to contact us. So I think the answer for the M&A is very clear.

There is no target of numbers or sites, we never had any target. We always did, when we found the opportunity.

We are not like the guy, who says I need today to four times, six months. No, we want to fall in love before to-date.

Then, the Telco all of us at world at Telco have been the first user of outsourcing and call center because when the mobile industry has been created in the mid-90s, the guy the management team who created who were they, the very first thing that they didn't want to be was to be with the legacy system of the fix and the legacy constraint of the fix. The Telco business has grown all over the world.

I would say, pretty heavily until 2007 and then had started to face competition decrease in pricing and stuff like that. So all over the world, I would say that Telco are much more in cost efficiency mode for managing the customer experience than anything else.

Yes, they want good quality and they're extremely professional because they know very well what it means, they know the quantitative KPI's, but they need efficiency. That's the reason why, the Telco all of us at world have been the very first one to go offshore.

Now, the Telco to try to control an ever growing flow of interact with their customer because the customer have taken the power and they want to speak more and more and interact more and if they're not happy, they have the right to, the customer speaks a call to call to the company now. So to face this ever growing flow of communication.

The Telco try to implement strategies of call avoidance, reduction of calls and development of self-help. Go to the site and you're going to find the answer to your question.

This match pretty well with the young generation, not so well with all the generation and at the end of the day. The result of this strategy was mixed.

Yes the Telco being professional, obsessional about controlling their cost are successful in finding new creative solutions, but at the opposite, it seems that there is always more volume than what they expect. And that's the reason why, I would say all over the world today.

if the Telco are continue to be a huge source of volume some of our major clients are Telco companies that continue to grow with us and not to decline and I would say, the relative decline of the Telco in our portfolio corresponds much more to the significant increase that we got in the other vertical and specifically if you want, to have a little bit more clue about the Aegis USA acquisition. We acquire the business quasi without Telco.

So suddenly it has an impact in the profile. Am I clear?

The revenue of the Telco declining [indiscernible].

The revenue of Telco, I'm not so sure that is declining. I don't have right now, but I'm not so sure because we have Telco, we have some of our big clients in Telco that are growing and it depends because you have to keep in mind something.

We never have are the sole provider of Telco. The large clients do not put all their eggs in the same basket.

So the revenue of a Telco, the expenses of a Telco can decline, but if we gain market share with Telco it's increased.

David, if I may? In 2014, we had an increase compared to 2013 at global level.

To be precise, the only country I mean, If I'm not mistaken the only that we had revenue decrease in Telco is France.

Yes it's France. It's maybe because you think the 3% represent or wouldn't represent.

David.

Do you price capacity offer to telecoms to some other verticals?

Absolutely, I mean imagine you have a center in a specific country and the Telco do not want any more to use all your center or even want to shut down this center. You have all your capacities, you have Asians that are extremely well trained that do not belong to our client and of course, all this become competitive advantage to compete into market and to offer either and to offer to other clients either to other telecommunication or to vertical that have more or less the same kind of profile and problematic.

Some question, we need to leave to take a plane. So let' make it quick.

Okay I'm going to be quick. Nicolas, Exane three questions.

First one is one data. So I know about the huge potential from in-sourcing to outsourcing and from onshore to offshore, but is there not a fear in the short-term that always these privacy issues and security that are issues, that they transfer from in-sourcing to outsourcing and onshore to offshore slows down in the short-term.

Second one on your margins in Ibero-LATAM it went down by 100 basis point between 2013 and 2014 so partly down to currency effect and probably also to the geographic mix with Brazil. If Brazil comes back up in 2015 can we have a margin in Ibero-LATAM going up again and third one on top line growth again in Europe.

I know it's quarterly evolution, so it can be volatile, but just to understand how we have 8% deterioration sequentially in Europe between Q3 and Q4. How can it be only down to TLS?

I'm going to take the Q4 just first question. There are some it's not only TLS you're right, but given the amount we're speaking of.

We're speaking of €5 million to €6 million out of the total of €700 million for the whole region. So you may imagine that the phasing between Q3 and Q4 mentioned from a year to another.

So it's so big, so big. So I may understand that you're I would say upset by that.

Remember we had exactly the same issue a year ago about Brazil, where Ibero-LATAM where Q2 was low and finally Q3 was higher. So again an analysis by quarter-by-quarter hasn't raised and I understand you have to work on that and you have to report on that.

What seems to be much more important is just to have a global view and finally, what we know that Europe is going to end up with a figure which is significantly higher in 2014 than it would be in 2015. So finally, I would say the analysis quarter-by-quarter has interest but the gain it could be between a mix from a contract to another phasing issue, so it's not so big at all.

So keep in mind, the 2015 figure will be much more since that has been done in 2014 and with our enduring or higher [indiscernible] like-for-like growth guidance that we gave you yesterday night and today. Maybe you want to tell a word about Brazil or about Brazil and LATAM?

So if I understand well, your question regarding the security you said that those breaches of security if then they can avoid the outsourcing process, is that correct?

No my concern is not only, can you [indiscernible] down the process [indiscernible]?

I think the companies they have their own security breach. I mean, the major security breach that we have seen during the year 2014 where inside the companies and frankly speaking, we do a lot of fraud risk assessment with our security team, data security team and when we see the point failure.

I can tell you that they are as many point of failure and sometimes more at our client system than what we have. It's not to say what is good or what is bad.

I mean, it's a world. It's a global world, where with our client we need to make a strong partnership to have our security team working together to significantly better address the point of failure of a process, but sometimes Teleperformance all our competitors are much more in advance in terms of security procedures than some our clients.

And it's a topic at multiple level because it's first a topic at cultural level. How is the security something understood very seriously in a company?

And I can tell you there is a lot of difference between what the people say and what they do and how do they behave? It can be an IT level, what are the safeties that have been put in place to make sure the security is going to be very strong.

I'm going to give you an example, we have for years a system and we have pattern in that. We have for years a system, where when an individual is going to give his personal data.

It can switch automatically to an IVR that is going to take the personal data and come back to the agent, so the agent is never in contact with the personal data and the IVR connect of course, sends to CTI to the computer and everything is automatized. So far we have been surprised not to see anybody including the banks using that.

I mean, its, this question of security is exactly to me. I see exactly 9/11 and the way, the world has changed from one day to the other does it mean that the people have taken less the planes, no because there are so many other reasons to outsource.

Yes just to answer about Brazil very quickly. The country is not doing well obviously everybody knows that the country is not doing well, but we really think that it's an opportunity for the companies to focus on their core business and an opportunity for Teleperformance to take in-house operations form those companies in the country.

So we as I already said, we started again to be back to grow in Brazil in the second semester and we are forecasting a growth for Brazil in 2015.

Let's take the last question please.

Thank you very much Pierre Bucaille, BPI. Just one question again on FX.

If I understand correctly on your guidance in full year 2015, you don't take any account of the change of the FX environment and if I may add another question to this one. Can you give us the impact of current FX environment on at least your full year 2014 EBITDA margin?

Of course we are taking in account the FX environment for 2015, just to be clear you saw the US Dollar which is a major points on the conversion which was 133 last year than average and as we speak today it seems the beginning of the year we are close to 115, so that makes the difference of course we are taking that, what will be the dollar by the end of the y ear. I don't know, what I'm just telling and it's not myself, but everybody can see that, since the strengthening of the dollar is helping that's mathematics just because the mix of result which are done across different region, that's it.

About 2014 we may have to talk just later on the question is what you understand by FX impact whether its translational, what is transaction. So I would suggest that we have specific talk on that just after the meeting.

Okay, so we have to thank you very much for coming. It's always a pleasure to see you including you.

David. All right and we hope to see you, with as good news in a year from now.

As many good news in a year from now.

Thank you very much.

Thank you.