Teleperformance SE

Daniel Julien - Executive Chairman

Denis Moreau - UBS Securities Suhasini Varanasi - Goldman Sachs Patrick Jousseaume - Société Générale Edward Stanley - Redburn Christophe Chaput - Oddo Securities

Good evening, all of you. I'm really happy tonight to be here to present to you the Result of the First Half 2017.

I hope you've received the press release and you had the time to look to it and to study it. I'm going to present to you much more in detail, with this presentation.

The first half result. We are going to start with comment of four financial indicators and make an update on key development to illustrate our worldwide leadership.

We'll deep dive after in the first half result and finish with 2017 final outlook. First half key factoring figure.

It's the first thing I want you to highlight in the first minute and just to give you a clear view of what I believe is absolutely key to keep in mind about the result of the first half. The first one is that we've been able to register again a strong like-for-like growth in revenue around 10% only 9.9% to be precise.

Not only we've been able to grow as we did precedent year at a sustained but we've been able also to increase our margin by 290 basis points versus last year in the first half. The profitable growth is much more better if it generates cash.

We have been working on this specific item for now over two or three years and we're very happy to deliver this first half net free cash flow increase, which is climbing by 57.5% to €178 million and finally due to the earnings per share increase by 33.7% reflecting once again, our growth statues and value creation strategy to benefit to our shareholder. LanguageLine Solutions acquired last September and it's in 2016 contributed a lot of this Teleperformance.

So let's move on much more in detail on this figure. First thing you'll find here again just at the glance what has changed in the first half.

As you can see we have been able to develop 5,000 new workstations that we opened this year. Both of new sites that has been opened in China and the UK.

In Colombia, Spain, Russia we opened Kosovo and some new site also in Greece. Not only we've opened new site but we've been able to extend some sites and notably in Jamaica, India, Colombia, the DR, Dominican Republic, Mexico, Germany, Sweden.

I'm just going to stop here but as you can see we've been able to develop dramatically offsite across the globe and of course we're now consolidating LanguageLine Solutions for the first time in the first half. So that is global fact about the Group on what happened.

So just to be clear, this increase in capacity address the growing demand in our market, growing voice, non-voice interaction and even a more complex and demanding environment and successful position with key premium local and global partner. I'm going to go back much more in the detail to the first half results.

So not surprised just to see that first of the level of the Dollar has strengthened a little in the first half, we'll see probably will change for the full year. But for the first half, the average dollar was $1.08.

The increase is 23.2% on a reported basis, 9.9% on like-for-like. About this figure, I just wanted to highlight again the level of the EBITDA €328 million close to 50% increase which is a 15.7% versus sales.

You'll find below as you're approaching profit the net profit, but as simple to be said growth of the revenue on reported term is 23% while alt indicator was EBITDA approaching on net profit on even diluted earnings per share are climbing significantly ahead. Especially diluted earnings per share are climbing more than 33% and that's of course significant figures that has to keep in mind.

What happened about revenue growth in first half? We had a small currency effect on the €20 million, you remembered it was significantly higher in Q1, it's because of the change of the dollar over the last end of this quarter.

But as a whole we had a small increase by €20 million mainly due to the Brazilian Real, Colombian Pesos versus and US Dollar versus Euro, but that's limited. More interesting is to see that the like-for-like growth came to close to 10% unfortunately we're not able to achieve 10%, 9.9%.

Sorry for that it's only €169 million while on the top of that you have the change and the scope related to LanguageLine Solutions that bring us €204 million this first half. To reach for the first time more than €2 billion in the first half.

We wanted to project on a perspective just to show that. Over the last five years, we've been able to deliver sustainably a growth which is an average growth of 8.2%.

of course there are ups and down, if I may say moving that - at 7% like-for-like should be welcomed by a lot of old competitors. But clearly we're delivering something which is above 8.2% with different pattern.

Probably the pattern of this year will be different than last year. It exactly happened this way two years ago, that you had first half growing up and second half probably a little lower compared to that, but as a whole delivering global gross which is significantly above the market and at least 7% like-for-like growth.

Coming to analysis by vertical, again we put this slides that you're familiar with. It's just to show that the trends that has been launched now four years ago, maybe five years ago is continuing.

The diversification across the vertical in the core business is continuing, there is a strong momentum in financial service, retail, healthcare and consumer electronics and as well as commercial success is online with service across all sector. For the first time, the Group has significantly increased it's part of this new sector in the business.

And lastly and at least something which is very important, the global account now will represent almost 40% of our sales. Revenue program that are generic across all geographies, that is absolutely something very absolutely key to us and we'll continue to that.

Also we're reverse [ph] in Florida, early January we're continuing this trend, this strategic trend and we're going to continue to develop that. Finally just to point to mention, the vertical that are less favorable.

I'm speaking of Telco and Telnet [ph] especially that we're more than 33% of our sales in five years ago are now less than 25%. So we're on the track of what we wanted to deliver over the last five years and we'll continue to do so.

Just a quick snapshot of our activity. You remembered that since we've bought LanguageLine Solutions, we've reorganized the company as the reporting recurring two activities one is what we call the cost savings, that you're familiar, we split in three major regions EWAP, Ibero-LATAM and CEMEA.

While you have the specialized service which is now gathering LanguageLine Solutions bought last year. TLS will be the processing business and softer collection business in US and the smaller activity called GN Analytics that is a small amount.

All of that, well I just wanted to say to just to give you some figures. Just to have an idea for how the Group is now structured.

But I just wanted to highlight that all this activity had grown in the first half. Different space, different timing but all of them growing and we're now happy to deliver such very good satisfactory like-for-like growth by activity.

We're going to go in much more in detail in a minute from that. Here are these famous figures.

As these famous templates should be a little more complex to read, but just to point out some things. If you go to the right-side of the templates especially on the like-for-like growth for the first half you'll find back your 9.9% growth that we just delivered, we spoke about a minute ago which is split in two major line.

The Core Service business 9.8% and the Specialized Services plus 11.4%. I just wanted to notice, yes the specialized services is not made LanguageLine Solutions which is not part of profile, of like-for-like growth so it's mainly TLS will be the processing business solutions and the overall company.

But what is interesting is to show that now both, I would say activities are growing sustainably more for specialized service which is not a surprise but all of them are growing as satisfactory. You'll find here breakdown of the growth of the different cost service division for the English world, the Ibero-LATAM world and Continental world.

We'll come back in a minute to that, but I just wanted to highlight that directly. If we move now to the results, you'll see that the results jump from €150 million to €245 million that mean the famous 290 basis point that I just spoke a minute ago from 8.9% to 11.8%.

Of course not only the specialized services climbed because of the acquisition of the LanguageLine Solutions last year but also the cost service grew from 8% to 8.4%. So the increasing the margin is noticeable into both activities.

So let's go now much more in detail in each region. Let's start as usual with EWAP, you'll find here the revenues recurring EBITDA.

Plus growth for the Q2 and for the H1. The Q2 growth in EWAP is 2.3% is this quarter and for the full half year 3.7%.

So performance is quite good finally. Surprisingly and is absolutely clear that is happening versus much more difficult comps in EWAP and we had also something that was not predicted the fact that even the change of the situation in Mexico and smaller scale in Philippines some people move their growth from Philippines to Mexico increasing the growth of the Ibero-LATAM and decreasing the growth in EWAP.

But as a whole, we're delivering like-for-like growth for the first half which is around 4% and is acceptable and even good. In terms of results, we are at the same level €60 million a little less in terms of margin which is mainly due to the gradual ramp up of new site as you know we just opened a new site in China, in Australia and new multilingual hub in Malaysia are just starting to deliver figures [indiscernible], so nothing worried about that.

Let move to the star of this first half, is Ibero-LATAM. Of course the growth has really reduced a little.

We are only 20% for the Q2, partially helped by the what I mentioned a minute ago from the switch from Philippine to Mexico, but as a whole total sector grew by 25% in the first half which is absolutely amazing and well the growth is absolutely. I would say not stable in Portugal, in Colombia, in Mexico and even the production in Brazil I would say satisfactory despite the global environment that is difficult to predict and to see what's going on.

So margin is roughly the same in terms of rate, but climbing dramatically in terms of volume from €43 million to €55 million. Clearly the effectiveness of the region for offshore business is helped by the Mexican pesos devaluation that we linked all this first half versus the dollar and versus other currency, but mainly versus dollar.

So Ibero-LATAM is delivering good result and will continue to deliver good result. CEMEA; back on track growth which is roughly 5%, the same for the first half and the first quarter and second quarter.

Solid momentum in Eastern Europe as well as Mediterranean countries mainly Greece, Egypt, Albania, Turkey mainly with global client. Northern Europe is as always a little softer even if it's better in Nordic, while the other are also much more calm.

But as a whole we grew by 5% and we've been able also to improve margin by €5 million from 1.6% to 2.7% and reaching €11 million. Let's move to specialized services.

Like-for-like growth is mainly driven by TLS, as you can see we moved from significant increase from 11% for the full half year and 10.1% in the second quarter, which is led and mainly volume but also by added value service that we've been able to achieve all over the different region where we're based. LanguageLine Solutions has delivered a very good figure.

Roughly the same as 8% in line with our Group expectation. And of course we took advantage of the strong increasing margin reflecting of course not only the growth of TLS but also the level of result of LanguageLine Solutions.

So finally when you put that together, you have an increase of EBITDA of 290 basis points I just mentioned it a minute ago. Driving the EBITDA to 63% increase to €245 million, 11.8% versus the sales.

Non-recurring items, non-cash item of €8 million nothing changed versus last year. On top of that, you have the amortization of the intangible assets €45 million which is naturally linked to the amortization of the part of the goodwill acquired to from LanguageLine Solutions which is also non-cash.

As a whole the operating profit is landing €191 million which is close to 46% increase. What we did?

What has to be mentioned below is that, we have been able to limit the financial result to a chart of €25 million despite the fact that we increased dramatically debt to €1.6 billion last year. But the rate is, I'll come in a minute to the cost of the debt but also there are some fixed gains that have been able to mitigate this cost and the cost of the debt is in the range of 2.6% for the full company.

Income tax climbing of course given the result of LanguageLine, but also in terms of rate given the fact that LanguageLine is much more tax compared to the whole Group being based in California with the US rate and [indiscernible] which is higher than elsewhere in US. Minority interest is flat net profit 25% and if you dilute it by share you reach 33%, 34%, that's where are the result.

Just wanted to stay a minute on a free cash flow because that's something that is probably, I do believe that when it comes to P&L, you were probably not surprised but the figures that we've just delivered, while in terms of cash flow we've been able to make very good performance. The cash flow has increased by €224 million as it was €168 million after financial charges, so which is a fantastic increase and we've been able to control our liquidity despite the fact that we continue to make some CapEx.

First of all, we continue to work on the working capital and as you can see we've been able to drive from our balance sheet €22 million of results that help us to finance the Group and in top of that, we have limited the level of the CapEx, not only in term of percentage that was weighted given the size of LanguageLine business consolidated, but also in terms of absolute term because we have been able to reduce versus last year so the level of CapEx has a whole. As a whole, compared to revenue we're significantly below 4%, 3.3%.

So the net free cash flow able to reap as debt is €178 million which is a very good figure. What we did with this figure?

With this €178 million. We mainly reduced debt, so net debt which was €1.6 billion by the end of last year is now €1.5 billion that is interesting to show that the Group when we decide to monitor all its liquidity is able not only to deliver what it was committed to but also to continue to grow in the same time because you can cut debt and making sure that you repay the debt, but if you do that without growing and without managing your business model it's not very good.

We are here in situation by which we have been able to continue to develop a business either in term of sales, in term of growth, in term of margin, but being also able to deliver cash and to repay of debt without under drawing the model. That's what I wanted to tell you, just to show what happened.

So this €178 million we're used to. First of all, we paid €40 million for the last.

This was the final earn out of TLS. And we paid the dividend of €75 million, which is drives you to €1.5 million, if you take in account the FX impact that was due to the level of the dollar that moved from $1.05 by the end of this year to $1.14 at the end of this half year.

Just to, a word on that and so you remember that we're not only we're decreased but we're still long-term credit rating BBB minus investment grade. I just remind you that we're the only company in this sector to be investment grade and I just wanted to highlight the point because it was right.

What about the debt? The cost of the debt is 2.6%.

We have an average maturity which is a little below than six-year, but more interesting we're now able to cover different facility of loan either from the bank, either from the Euro bank, either from the US bank and we're developing also as we speak the new commercial paper that are growing significantly over the last month, with across which is negative as you can believe. More you get money, which is a surprising way but that's a - it's a way to work.

So we've diversified your financing source and not only we're diversifying your financing source and with maturity in average cost, but we're also protect against interest rising rate that all of you and probably me too are suspecting that could arise. Out of the 65 fixed rate that is shown here, roughly of set of eight that has been transformed into floating rate with [indiscernible] that enable us to take advantage of the low level of the rate, but being protected of any rising amounts in the coming months that might happen.

So as a whole, the reduced debt, debt under control, debt not costly, debt protected against rising rate. Just a word about the outlook before letting - to question.

What we said is simple. We don't change grammatically or guidance, we're going to - we've increased like-for-like growth from 6% to at least 7% probably it's conservative but you know that, we are like and we continue to develop an objective of EBITDA margin above 13% and we're quite confident of achieving such figure.

Last point, which is very important we're committed to deliver a strong free cash flow and I do believe that this year we'll be able to continue to do so. So that's, that was the point I wanted to make.

Of course ready to take your question. I'm sure you have some.

Three questions, please. The first one relates to what you said about the move of revenues from the Philippines to Mexico and you mentioned that it was due to Forex and the geopolitical situation.

I'm actually a bit surprised regarding the currency because even if the Mexican Peso and the Philippines Peso are both depreciated against the US Dollar over the past two years. It's been exactly the same move and since the beginning of the year.

The Mexican Peso has actually gained 14%. Whereas Philippines Peso has continued to depreciate, so can you elaborate on that, what has happened here exactly?

Why you've gained some revenue in Mexico compared to the Philippines for the duration? Second question relates to EBIT margin in Ibero-LATAM it's down 40 bps year-on-year, could you elaborate on that?

And my last question is on the growth of growth for the second half. Your guidance is for more than 7% which implicitly mean at least for [indiscernible] in H2.

Which looks relatively cautious, so can you give some color on your expectations for the second half. Do you expect any slowdown in the specialized services or what drives this question, please?

Well the question about FX, you might be okay now but if you look to what was the story end of March, the story was not exactly this one because reinforcement [ph] of the Mexico Pesos is very recent because it was at that time in March around $21.2 and now it's closed to $18, so it has changed but the decision of the growth will probably make it - well probably well-made significantly ahead of that. So is that the reason.

It's not the only reason. The main reason - one of the reason is also the global environment in Philippine and I'm not say that we've taken business from Philippine to Mexico.

I'm just saying that people that wanted to grow they prefer finally to grow much more in Mexico than in Philippine doesn't change really the stuff for us as a whole, the level of the margin similar from Philippine and Mexico, but no work has been, no business has been taken out from Philippine to send to Mexico, but the growth that we were awaiting much more balance between the two region, we're much more put on Mexico. Part of their story is very fixed and it's true that it was probably much more advantageous last March or last April at the time the people who are making the decision are now.

But not only that, so global environment in the south of Mindanao in the south of Philippine doesn't help also, does that mean that there is a big risk in Philippine because you know we have opened one new site in Mindanao in the north of Mindanao close to a region which his much more troubled in term of political environment and people, especially US people decided to prefer Mexico. I don't see it as a trend I'm just saying that, when you look at 25% growth in Philippine, Ibero-LATAM and 4%, 5% growth in US apart from US, [indiscernible] it should be much more balanced.

So well I'm telling there is no major issue by that. But the EBIT margin in Ibero-LATAM it's mainly, so frankly I'm not afraid of the EBIT margin for the full year.

Don't take it as a trend. It's mainly due to the fact that we develop new site especially in Brazil, but not only in Brazil also in Dominican Republic, we opened a big, big site in Dominican Republic more than 1,000 people that have just started to, in fact that's doing well and also in El Salvador they're just starting to climb up, I would say April-May, so that is the reason.

On top of that sometime as you might remember the distance could be has been a little more impacted than last year but it's marginal. So as a whole for Ibero-LATAM I'm not waiting on contrary totally the contrary the opposite.

I'm really confident about the level of the margin by the end of this year. About the growth outlook, I believe the minute you start to know us, we put 7%, maybe we put 8%.

I don't know what we know for sure, is that the pattern there would be different. We know that the Q3 is probably more difficult than, is probably the more difficult quarter of the year because we're a good tough comps last year and we knew that.

But as a whole, we're not really worried about that, we do believe that we will deliver a very good performance. I'm sure you've noticed that over the last five years.

We have delivered on the long-term period, an 8.2% if I'm not mistaken performance over the year. I'm not going to take a commitment but I don't see why we shouldn't be very, very far from that.

Thank you very much for the very clear question and just [indiscernible].

Couple of questions from me please. You mentioned that the US domestic business has grown very nicely under this effected margins.

But you also noticed that, you've faced out some unprofitable contracts there in second half last year. So I'm just curious to know, what has impacted margins in EWAP and maybe you can remind us what's the difference in margins between the US domestic business and the offshore?

Perhaps most of the growth came from here. The next question is on CapEx.

You've mentioned nicely how the CapEx has fallen on a year-over-year basis both on asset percentage of sales as well as on absolute level. What are your expectations for the full year please?

Okay, let's start by the CapEx. It's tough to tell but I don't see why we should be beyond 4% of CapEx by the end of this year.

But that's probably in the range that we're speaking up. As far as EWAP world, I'm not sure perfectly I understood your question whether it's US domestic.

Part of the story in the EWAP world is not only US, is a fact that we opened China, Guangdong; we opened Malaysia, we developed Australia. So there is a lot of things that came on stream especially in the Q2.

So of course there is a difference between domestic and I'm sure I'm not going to comment it by directly. I might be wrong but there is no specific domestic issue to US versus last year or versus previous quarter or previous last year.

So I might have missed what your question. I don't believe it's still the case.

The story of EWAP is the fact that you've opened new I would say factories if I may say this way especially massively in Asia, but also a little in UK without being able to feel them very quickly partially due to the fact that, I mentioned about the switch between Philippines and Mexico but also because of the timeline.

Okay, I'll just ask a follow-up please. The US domestic business, are you seeing any change in customer behaviour in terms of preferring US domestic business over offshore and onshore?

Frankly not. I know there are lot of people that were little afraid more than afraid but after the Trump election the offshore and the onshore.

I would say maybe it's surprising I would say consequence of Mr. Trump election that in a way the business in Mexico coming from US has grown up.

Which could have been surprised and could have been not waited at the time he was elected? So I don't see a big issue there are some clients that still don't want to go offshore and onshore because they are by means they don't want to move on.

But I don't see the growth of offshore and the onshore stepping as we speak.

Thank you.

First question is about LLS, TLS. Could you maybe give a bit more color about the evolution of these two entities in the first half?

Second question, we have seniors and chief and government wanting to accelerate visa delivery for people leaving France could you tell us to expect benefit from that? And third - third question is more housekeeping question, would you say that for intangible amortization, for financial charges, we should consider that H2 will be more as same line with H1 and would you also for tax rate that regarded in H1 should be sweet up to one, for full year?

Thank you.

Thank you, Patrick. I'm going to start by your question in the other way.

About the amortization of goodwill, I do believe that you can double it, it makes sense. Of course there are some Forex impact that might change a little bit, at the whole it should be roughly double that what we've booked in the first half.

As far as tax rates, I hope to be at the same level. So far I would prefer you to be a little prudent, careful between 30% and 31%.

As you know we have integrated now LLS with tax rate which is close to 40% so I'm afraid will be little higher than last year. We're working on that I'm sure you know they will be waiting for Mr.

Trump about his tax reform but so far we have no clue about what could be the outcome. So far let's a little careful and stay at 30%, 31%, let's say 30.5% and we'll see what will be the outcome at the end of the year.

About TL - LLS, LLS exactly well. It's a beauty this business because somewhere it's really steady.

So yes, you have a growth which is steady sometimes it's not exactly the same sector as that what we are waiting, but the growth is steady. A little more in US and UK it's true, but as a whole we see, we're exactly on line with the plan at the time of the acquisition so you're growing by 8% on a regular basis.

So it's mainly driven by what we call OPI over the phone interpretation but the video is climbing also dramatically even if the video translation is low, less than 5% of the sales, even dramatically increased by 15% or more than 15%. But when you're starting from something which is small even growing at 15%, it takes time to get bigger when the world [ph] stories is growing by 7% or 8%.

So that's where we are, what is interesting is that again I mentioned it earlier on, in the meetings we've been able now to develop dramatically the level of interaction between Teleperformance and LLS and the ability to work with other people from outside. So I mentioned already the side of the business in Egypt, we're moving in Colombia, we're moving in Russia, we're moving in China, where we're able to find, people that are speaking by nature the language and ability to help our LanguageLine to get sales which are a little more tricky to get with language which are difficult to get.

Now we're now moving to the east of the language. I'm speaking about Vietnamese, Korean that we will need to work on, but it's developing well and we're happy.

As far as TLS is concerned, I would say again it's a beauty, it's a business which is driven two things and volume and we've had not new contract but we've been able to develop new contract and people are back again in France but not only in the UK, especially Russian people but Chinese people are back in France also people from the North Africa. So this is going very well and the group now is much more, the TLS group is much more organized and we're able to upsell new system.

I would say premium activity, insurance and different things that helps also to drive the growth of this business. So I don't see why I don't want to be too much predictive but I don't see why TLS will not again deliver a very good year in 2017.

So of course we need to wait at the end of the season, July, August and September are key months. But I do believe we are in the right direction.

Of course the help of the given month to develop the business is absolutely key. What is clear my chance to story I don't know what will be happening with BREXIT and what is going to happen with people that might meet [indiscernible] start to come to UK, I don't know what friend of UK will be doing but we're reasonably placed to take advantage of such move that I believe might happen in the near future but not before 2018.

As Brit's don't know how they're going to get out of the Europe, so don't bring on that but I believe we're well placed to take advantage of it.

Thank you.

I've got three quickly. I may have missed the first one.

But I was wondering on the UK contracts that you're trying to save yourself out of the unprofitable ones. I'm wondering is that going to finish by the end of H1 or will that continue for the rest of the year.

Do you think that drag? The second question given the balance sheet is better, are you now on the lookout for M&A targets for the end of the year?

have you got deals in site and thirdly, you put out a press release in the beginning of April about your Chatbot functionality and rolling out your Chatbot's and I'm just wondering what are early stage demand picture as in whether the uptake in that is been more than you think?

Thank you for this three question about UK. I must confess it could be quicker than what was we're leading.

So I do believe the Q3 will be a little tougher too. Take a little more time than we thought.

I'm not really worried about that, but it takes time. The global environment and I'm sure you know that better than me, it's not fantastic in UK, why being not I would say disaster far from that.

So we're in a blurry world, so we're delivering since, but we're not back in the giant growth of course. We'll see that Q3 at the end of Q3.

But I suspect the direct chance should be much in Q4 than in Q3 as we expected six months ago. About M&A, clearly I'm sure you've read our statement of Chairman or CEO.

The first thing was to say we're committed to come to a level of debt and I'm sure you remembered the slide that I showed in Florida and even in the first half in Paris at the full year or was it last year in Paris? To come back to net debt ratio from EBITDA versus EBITDA to at least two by the end of 2017, that's where we are, we're committed to do so, we're rated we wanted to show to the people that are following us [indiscernible] that we're able to continue to deliver that.

Doesn't mean that we're not going to look acquisition. Of course not, so we're looking to lot of things.

Clearly 95% in the specialized services division that's clear. Whether we'll find the right target it's too early to tell, but what we're going to do.

The objective is to hopefully make something in 2018 provided we find the right target, we don't need to go too rush, we need to make the right choice. But of course we're committed to come back to M&A again.

As far as Chatbot's is concerned is very beginning, all the people on the road trying to sell that. But what I can tell you is that, the Group is perfectly of the future disruptive activity on - that might happen and we're working on that intensively help, we'll be able to give you more detail in coming weeks or months, but we're clearly and we're looking to that very closely.

Thank you.

Two quick question from me. The first one is regarding LLS.

I'm not sure to have what understood your proposed let's say on pure organic growth. You say that LLS was plus 8% in H1?

Yes.

I mean on the pro forma basis.

Yes. I'm always cautious because if I may say, before I consolidated I was not controlling the figure.

So I have the figure that has been given to me, so we are at eight a little more depending how the accounts, but we're exactly in the line in, the line that we have defined at the time we make the acquisition, that's what I'm. And a little more in US and little less in UK.

It was a very small sub in UK in the LLS.

And there the performances let's say of the specialized services as a whole.

But you know the size of LLS versus TLS is more than double. But as a whole I'm not sure it has a big sense to just to compare the fact that TLS grew by 11.4% in the first half and LLS 8%, outdrawing conclusion from that.

As a whole, if I'm sure you remembered that we say that we were believing cost service business should grow between 5% and 6% and the specialized division between 7% and 9%. If we're able to do better I'm not going to speak on it, but clearly there is no surprise on that.

Okay and the second one is just to clarify on Brazil especially in the staff cost because in some press article for example in the Rico [ph]. It seems the government in the coming quarter will try to ease the cost of labor but I mean it's a project and but on the other hand some other tax such as INSS, could negatively probably offset as the cost of labor for some business services company.

So just to clarify these points, what is your view on the staff cost in Brazil for the coming years for the staff?

I would love to give you straight answer. You know there is INSS story which is, we had an exemption of the cost for years and years and the new President Mr.

Temer decided to issue an executive order stopping this exemption. To make it pass it's a little complex Brazilian.

You know he has to get a vote before the 10th August, if it's not voted by the parliament by the 10th August, his executive order it will fall down. From what I understood from the Brazil because I was in Brazil last June.

There is not a fantastic I would say happiness on this tax and especially in the assembly either for the two chamber. So I doubt, but I'm not sure this executive order will be voted.

So we don't know to make it simple. Either it's confirmed and it will be - I would say put in place starting now until the end of the year and for the future and there are some other positive mitigations that might happen, but they're not clearly defined today.

Either it does not - is not voted at the 10th August which is 120 days after the executive order. Frankly I don't know, from what I'm seeing and given the level of and I don't want to give you much more detail on political Brazil, but from what I'm seeing that the level of confidence that the country is giving in the new President's I'm not sure this will be voted by the 10th August, if it's a case that means there won't be any change until the end of the year, after 2018 or the end of the year.

So as you know, it's quite blurry it's difficult to tell today but I cannot give you much more detail on that until the 10th August. But that's the whole, the story is always the same.

Sorry, we have the same story years ago in Colombia is whether you're able to pass that to the client after and we'll see the negotiation we'll start at that time. But we're not here so far.

And again on this point, just as a follow-up because your premium in term of positioning in Brazil, what part of this possible tax you could partly take it to carry on, considering the background. Let's say your perfect record in Colombia.

Tough question. From what I saw depending on the client, if it's premium you're able to pass 90% of it, for basic stuff it's more complex.

But frankly I don't want to give you figure because I don't know. Let's say 50%, but I don't know.

I would suggest to take the last question. I know Mr.

[indiscernible] want to raise the question, so let's move on.

So two question on my side. First one on LLS margin, so the stable performance basis H1 versus H1.

Have you approved of that or because you were able to basically develop video services which probably is a bit priced margins on the rest of the business and because they're also in the company to get access translated in new countries probably achieve [indiscernible] relative the margins. LLS, do you still expect rollout the business in other geographies mainly Europe and China and when and last question coming back on Brazil.

For Brazil, in your guidance have you been taking into your EBITDA margin guidance is a possible negative scenario on this tax on Brazil or not?

Okay, LLS margin I must confirm that I'm satisfied with that. I just wanted you to remember, I'm not sure it's you, but some of you analysts say that this level of margin when we announced the acquisition was not just enable, so at least we show that the sustainability of this margin is proved.

It could be better. The point that you mentioned about the new services and the new countries and the video, it's true.

In the meantime, you have a little less business in UK so it's marginal. So finally doesn't change dramatically the story.

So it's going to develop. It's not happening in a day.

About the rollout of business. Frankly we just start on that.

It takes time. We look to different solution.

I'm not going to come back on them. We decided not to move on that.

So the rollout in China is probably the first one to come. And I don't see before the end of this year.

About Brazil impact of course and that's why some of you might say, okay you're always careful when you say you're only at 13% like EBITDA margin. We're factoring a lot of risk, you start know we have risk at different place, we have different risk.

So we are very cautious about that. But frankly I do believe that we are committed to a guidance in terms of sales, in terms of margins and are careful, are hopeful, will be able to deliver very, very good figure in 2017.

So don't be - business is made of different possibility and you can factor all the good, all the bad or the job is just to find an average and I'm quite confident about this year to come. Even if the and I wanted to mention it, even this quarter should be more difficult to beat than the other one.

That's what I wanted to let you know I'm really happy of this figure. Again I just wanted to –I'm sure because no question were raised about that, but the quality of the Group figure in terms of cash and it will continue and we're committed to that again.

And I wish all of you very great summer break, which I hope will be resting for you. Thank you all.