Transcom: Year-end report 2016

Fourth quarter 2016

• Net revenue €155.2 million, a 1.0% decrease compared to Q4 2015 (156.9). Organic growth was +1.4%.
• EBIT was €9.0 million (4.1), representing an EBIT margin of 5.8%, compared to 2.6% in Q4 2015 (4.1% excluding non-recurring items).
• Net income €8.1 million (0.3).
• Operating cash flow €9.6 million (9.4).
• EPS 31.0 Euro cents (1.0).
• On December 21, Altor made a public cash offer to Transcom’s shareholders, offering SEK 87.50 per share.

January-December 2016

• Net revenue €586.1 million (626.5), a 6.4% decrease. Organic revenue decreased by 4.4%.
• EBIT was €23.4 million (20.0), representing an EBIT margin of 4.0% (3.2%). EBIT excluding non-recurring items was €22.9 million (23.2), corresponding to an EBIT margin of 3.9% (3.7%).
• Net income €16.1 million (8.7).
• Operating cash flow €5.0 million (20.6).
• EPS 61.5 Euro cents (33.2).
• Net debt/EBITDA 0.6 (0.6).
• The Board will make a decision concerning a potential dividend for 2016 ahead of the notice to the AGM.

Comments from the President and CEO

The improved operational efficiency we saw in Q3 continued into this quarter. Capacity utilization in the English-speaking markets & APAC region continued to improve compared to the first two quarters of the year, as we are ramping up new business with several clients. The North Europe and Continental Europe regions also delivered better results this quarter, on the back of higher business volumes and improved efficiency. Our improved results are fully in line with the outlook that we disclosed in our Q1 2016 and Q2 2016 reports. Also, our reported revenue and EBIT fall in the upper range of the financial guidance that we released on December 21, 2016.

Higher capacity utilization in Q4

After a challenging first half of 2016, with an unexpected temporary volume drop in the English-speaking markets & APAC region, as well as soft volumes in the telecom sector in North Europe, our results have significantly improved. Our efforts to win new business in order to fill unused capacity in the English-speaking markets & APAC region started to yield good results during the third quarter, and this trend continued into the fourth quarter, with a fast-improving utilization of available capacity. In Europe, solid growth with clients in other sectors has compensated for lower telecom volumes. The full-year and Q4 financials clearly reflect this positive progression during the year.

Improved EBIT margin

We delivered an EBIT margin of 5.8% in the fourth quarter, compared to 4.1%, excluding non-recurring items, in the same quarter 2015. Profitability also improved compared to Q3 2016. On a rolling twelve-month basis, our EBIT margin improved from 3.5% in Q3 2016 to 3.9% in Q4 2016. Higher efficiency and cost savings in Europe and new business in the English-speaking markets & APAC region were the main factors behind the improvement. The realignment of our regional management structure in the Continental Europe region, estimated to yield €2.9 million in annual cost savings, was fully implemented during the fourth quarter. We are now within reach of our goal to generate an EBIT margin of at least five percent, reaching an average EBIT margin of 5.5% in the six-month period between July and December 2016. Transcom’s financial position is strong. Net debt/EBITDA was 0.6 at the end of 2016, well within the financial covenant threshold and Transcom’s target.

Public cash offer to the shareholders of Transcom

On December 21, 2016, Altor AB announced a public cash offer to the shareholders of Transcom, offering SEK 87.50 in cash per share, corresponding to a total value for all outstanding shares in Transcom of SEK 2,294 million. More information about Altor’s offer can be found on altor.com/transcomoffer. Transcom’s independent Bid Committee unanimously recommends that the shareholders of Transcom accept the offer. The acceptance period for the offer commenced on January 16, 2017 and will expire on or around February 21, 2017, subject to any extensions. Altor has stated that they support Transcom’s strategy, and – if the shareholders accept the offer – they are planning to accelerate the implementation of some activities, increase investments to support digitalization and also make targeted acquisitions.

Johan Eriksson, President and CEO of Transcom

The interim report is also available for download on www.transcom.com

Results Conference Call and Webcast

Transcom will host a conference call at 10:30am CET (09:30am UK time) on Wednesday, February 8, 2017. The conference call will be held in English and will also be available as webcast on Transcom’s website, www.transcom.com.

Dial-in information

To ensure that you are connected to the conference call, please dial in a few minutes before the start in order to register your attendance. No pass code is required.

Sweden: +46 8 505 564 74

UK: +44 203 364 5374

US: +1 855 753 2230

For a replay of the results conference call, please visit www.transcom.com to view the recorded webcast of the event.

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This information is such that Transcom WorldWide AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below, at 08:00 CET on February 8, 2017.

For further information please contact:

Johan Eriksson, President and CEO              +46 70 776 80 22

Ulrik Englund, CFO                                                     +46 70 286 85 92       

Stefan Pettersson, Head of Group Communications  +46 70 776 80 88

About Transcom

Transcom is a global customer experience specialist, providing customer care, sales, technical support and collections services through our extensive network of contact centers and work-at-home agents. We are 30,000 customer experience specialists at 52 contact centers across 20 countries, delivering services in 33 languages to international brands in various industry verticals. Transcom WorldWide AB’s share is listed on the Nasdaq Stockholm Exchange under the ticker symbol TWW.