Q4 2019 Presentation Todays presenter Jonas Dahlberg President - PowerPoint PPT Presentation

February 14, 2020 Q4 2019 Presentation

Today’s presenter Jonas Dahlberg President & Chief Executive Officer Transcom since June 2019 Previous roles: CFO, Transcom Holding AB (2019-2020) • CFO, Sweco Group (2012 – 2019) • President, Sweco Russia (2008 – 2012) • Associate Principal, McKinsey (1998 – 2008) • 2

Agenda Q4 highlights • Company and strategy • Financial performance • Summary •

Q4 highlights Continued positive trajectory on key financials – EBITDA, • E/O items, operating cash flow, leverage Strong inflow of new business in Q4 and early 2020 – • Mitigating INPS contract ended November 30 Continued expansion in near/offshore – Ramping up • additional capacity in Zagreb (Croatia) and new site in Tunis (Tunisia), sites in Cairo (Egypt) and Davao (Philippines) under development Gearing up for next phase for Transcom – Profitable • growth through client focus and operational excellence, supported by strong leadership and culture 4

Company and strategy

What we do: outsourced customer relationship management We are a global customer care provider …supporting our clients’ digital agenda …delivering services in 33 languages to offering future proof customer facing by combining our core services with international brands in various concepts delivered by our global leading digital capabilities and tools… industries team of local specialists… Services & utilities 27,000 Conversational customer experience specialists commerce serving customers via Utilities BFSI Gov & Media Travel Health- care Digital Gamification channels Commerce & Logistics Core services Call Chat Email Auto- Logistics Retail/ IT/Tech White- motive e-commerce goods Robotic Chatbots Process Automation Telco & Cable Interaction Social media Messaging Analytics Telco Cable 6

Where we do it: Western Europe and Global English markets – Through international delivery Europe Global English • • Delivery across US Markets • Europe UK • • 33 languages Philippines • • On-shore in 9 Off-shore from countries the Philippines Delivery model • • Near- /off-shore Work-at-home in from 8 countries the US Share of total 34% Europe revenue Global English 66% 2019FY Site locations Serviced geographies 7

Solid foundation as basis for profitable growth 2. Profitable growth 1. Building the foundation • Reduction of 30 MEUR OH and support cost • Client focus • Attractive segments and delivery locations • Operational Excellence • Developing strong digital offering • Culture & Leadership From 5 to 9% EBITDA Double digit margin and 2015-2019 solid organic growth 8

Closing the books on PPP – 33 MEUR savings achieved in OH and administration EUR m 33.1 33.0 4.8 Headcount reductions in support 10.2 functions, transfer to Shared service centers, and procurement 21.0 12.2 Headcount reduction through 1.8 delayering, ratio optimization, and 10.6 transfer of services to Shared service 8.4 centers 11.0 Headcount reduction through 6.0 16.0 delayering, ratio optimization, and 12.3 10.8 transfer of services to Shared service centers 5.0 2017 2018 2019 Target Actual run-rate English speaking region Europe Central functions 9 Gross of investments, ca. EUR 1.5m in 2018 and ca. EUR 1.0m in 2019. Some Central functions savings shifted to Europe and English

Transcom is growing in attractive customer segments Revenue by industry segment, EUR m EBITA 584 Developments during the quarter 2019 544 541 • Further optimization of Telco 179 Telco & Cable 5.1% 271 208 portfolio • Ramping up Danske bank • 6.4% New utility client 208 206 • Service Exiting INPS 214 & Utilities • 10.7% Adding several new small and mid- 155 Commerce 130 99 sized e-com clients & Logistics 2017 2018 2019 10 Note: FY 2017 is consolidated at Issuer level, adjusted for EO items and full year adjusted for the acquisitions of TWW group and Xzakt group. On July 27, 2018, the group acquired Awesome OS which has been consolidated from this date. 2019 includes Latin America until Feb 2019 (0.9M Sales and -0.1M EBITA). Adj. EBITA% per industry includes allocation of unallocated/group-wide expenses.

Transcom is shifting towards profitable delivery locations Revenue by type of delivery (%), EUR m EBITA Q4 2019 2019 Ramping up additional capacity in Zagreb 584 544 541 • and new site in Tunis Nearshore 8% 9% 8% 10% Developing new sites in Cairo (Egypt) and • Davao (Philippines) – Ready for clients Offshore 18% 20% 19% end Q1 25% Q3 2019 New site in Pasig, Philippines • New site in Elblag, Poland • Q2 2019 Onshore 74% 71% 2% 65% Acquisition of ASA Informationsdienste • Q1 2019 Divesting operations in Chile • New site in Novi Sad, Serbia • New site in Zagreb, Croatia • 2017 2018 2019 11 Note: FY 2017 is consolidated at Issuer level and full year adjusted for the acquisitions of TWW group and Xzakt group. On July 27, 2018, the group acquired Awesome OS which has been consolidated from this date. 2019 includes Latin America until Feb 2019 ((0.9M Sales and -0.1M EBITA).

Next phase is about profitable growth – Achieving double digit margins and solid organic growth Client focus Operational excellence Culture and leadership Strengthen market presence Operational performance Leadership for people performance • • • in North America management Accelerate sales in Europe Best practices for productivity, Clear, decentralized accountability • • • recruiting, retention and workplace and lean OH presence Develop and protect existing clients Client-by-client improvement Culture of client and customer • • • approach centricity 12

Financial performance

Q4 – Solid improvement of financials • Profitability – Q4 EBITDA ex EO • 16.6 MEUR, +1.0 MEUR • 11.7%, +0.8pp • Significantly lower EO items: Q4 -0.5 MEUR (-3.6) • Improved operating cash flow: Q4 21.2 MEUR (3.5) • Net debt/EBITDA 4.2x (5.3) 1) 14 1) Net debt / EBITDA 2019 calculated in line with the definition of Leverage Ratio in the terms and conditions of the outstanding senior secured notes based on an EBITDA of EUR 47.4m (not including non-recurring items in excess of 15% of EBITDA) and Net Interest Bearing Debt of EUR 198.3m (excluding Subordinated Loans and pension liabilities)

Continued trajectory of improved profitability Sales and EBITDA development 1) Summary of historical P&L 1) EURm EURm 2015 2016 2017 2018 2019 2018 Q4 2019 Q4 627 586 584 Sales 626.5 586.1 584.0 543.6 541.5 143.0 141.8 544 541 Cost of sales -492.7 -458.7 -456.3 -419.3 -399.3 -105.8 -101.1 -8.2 -7.7 -10.9 -2.1 -4.1 D&A 2) -8,9 -8.0 (11.6%) D&A leasing -0.4 -0.1 9,0% Gross profit 125.0 119.4 119.5 116.7 130.9 35.1 36.5 7,2% 6,5% % margin 19.9% 20.4% 20.5% 21.5% 24.2% 24.5% 25.8% 5,3% 5,2% SG&A -101.6 -96.2 -89.5 -85.1 -79.3 -21.7 -20.5 D&A leasing -12.5 -3.3 49 39 38 32 31 Adj. EBITA 1) 23.4 23.1 30.0 31.6 39.0 13.5 12.7 % margin 3.7% 3.9% 5.1% 5.8% 7.2% 9.4% 9.0% 2015A 2016A 2017A 2018A 2019A 62.8 20.2 Adj. EBITDA 1) Sales Adj. EBITDA Adj. EBITDA % % margin 11.6% 14.3% Adj. EBITDA excl. 32.3 31.2 38.2 39.4 48.8 15.6 16.6 IFRS 16 4) % margin 5.2% 5.3% 6.5% 7.2% 9.0% 10.9% 11.7% 15 1) 2014 – 2016 figures represents consolidated TWW accounts, 2017-2018 is consolidated at Issuer level, and adjusted for the acquisitions of TWW and Xzakt group. On July 27, 2018, the group acquired Awesome OS which has been consolidated from this date. 2019 is fully including recording of IFRS 16 Leases, no retroactive calculation done for comparison periods. 2) M&A amortisation not included in D&A.

E/O items trending downwards Q4 non recurring items totaled EUR -0.5 Non recurring items, EUR millions 50 million LTM By quarter 45 • Of which EUR -0.3 million operational 40 37.3 34.4 34.5 • Of which EUR -0.2 million transactional 35 32.5 30 23.8 25 20.0 E/O continued to decline and totaled EUR 20 16.6 8.4 million for 2019 15.0 15 11.5 9.5 20.6 8.4 10 5 2.2 7.0 7.2 6.0 0.8 0.5 4.3 3.6 4.0 3.5 3.1 2.2 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 16 Note: FY 2017 is consolidated at Issuer level and full year adjusted for the acquisitions of TWW group and Xzakt group.

Improved operating cash flow 2018 2019 EURm 2018 2019 Q4 Q4 • 2019 operational cash flow Profit/loss before tax -32,226 2,143 2,636 4,496 improved to EUR 51.4 Adjustments for non cash items 30,050 33,429 -752 5,717 million (2.5) Net financial items 19,674 17,565 3,861 4,973 Income taxes paid -2,288 -7,456 -1,513 -2,382 • Q4 operating cash flow Changes in working capital -12,716 5,684 -774 8,417 improved to EUR 21.2 Operating cash flow 2,495 51,366 3,459 21,220 million (3.5) Investments -8,803 -16,522 -2,162 -6,738 Acquisitions/disposals of business, net of cash -34,033 -1,101 -1,046 - • Q4 working capital Other 1,048 -560 791 -476 improved EUR 8.4 million Cash flow from investing activities -41,788 -18,183 -2,416 -7,213 (-0.8) Cash flow form financing activities 34,072 -32,055 -4,450 -12,165 Cash flow for the period -5,222 1,127 -3,407 1,841 17