Transcom reports financial results for the second quarter and six months ended 30 June 2013

Q2 2013 financial highlights

  · Net revenue €166.5 million, a 13.0% increase compared to Q212 (€147.4
million)
  · Gross margin 19.0%, a 0.5 percentage point increase compared to Q212 (18.5%)
  · EBIT €2.9 million compared to 1.4 million in Q212
  · EPS 0.2 Euro cents compared to (0.1) Euro cents in Q212
  · The exchange rate impact on revenue was +€0.1 million, and the impact on
EBIT was negligible
Comments from the President and CEO
Transcom’s core business is customer care outsourcing (CRM), supporting our
clients in driving revenue and brand loyalty. This business represents over 90
percent of Transcom’s revenues, and it expanded both in terms of sales (+14.8%)
and EBIT, which grew from €0.5 million to €2.9 million compared to the second
quarter last year. Out of this €2.4 million improvement in our CRM business,
€0.9 million is attributable to the deconsolidation of our former French
subsidiary. As previously announced, we are evaluating a number of strategic
alternatives for our non-core collections business (CMS). This process is
progressing, and we will communicate further details as soon as a decision has
been reached. We are currently also executing on a number of other important
activities to strengthen the company’s strategic position as well as its
financial predictability and performance. As a result of these actions, the
results this quarter were burdened with temporarily higher corporate costs,
mainly legal and professional fees. We expect that these costs will start to
reduce from Q4 2013.

Continued strong revenue growth
Revenue in the quarter increased by 13.0% compared to the corresponding period
last year. All our regions grew their top-line, while revenue in collections
business (CMS) fell. The revenue growth is mainly organic, driven primarily by
higher volumes with existing clients. We have also added several new clients
over the past year, contributing meaningfully to overall growth. Foreign
exchange effects did not have a significant effect on revenue.

EBIT increase driven by Central and South regions
EBIT increased to €2.9 million (€1.4 million in Q212), driven by improved
performance in our Central and South regions. We are continuing to focus hard on
improving profitability in underperforming regions. Our EBIT performance in the
quarter was negatively impacted by higher corporate costs, which increased from
€5.0 million in Q212 to €6.0 million this quarter. This increase in corporate
costs is of a temporary nature, and is explained by higher expenses for legal
and professional services in relation to the closure of Transcom’s former French
subsidiary, the evaluation of strategic alternatives for our non-core CMS
business unit, and the management of tax claims. We expect corporate costs to
begin decreasing in Q413.

As previously announced, we are in the final process of negotiating the terms
and conditions upon which Transcom will be released from any further liabilities
with respect to the liquidation of our former French subsidiary. In this
context, Transcom transferred €5.3 million in Q213 to an escrow account in
France. This sum represents the estimated cost of a settlement agreement related
to the closure of Transcom’s former subsidiary in France. While this payment
materially affected our cash flow and net debt in the quarter, net debt still
decreased compared to last quarter.

Divestment of Belgian operations and organizational changes
In the context of refocusing the company’s activities on core markets, Transcom
has divested its operations in Belgium. The contribution of Transcom’s former
Belgian entity to Group results is not material. In the fiscal year 2012, this
entity reported revenues amounting to €4.2 million.

Effective July 1, 2013, Transcom’s operations in the Central Region are
consolidated into the North and South regions. The Netherlands will be
consolidated with the North region, while the rest of the countries in the
former Central Region – Croatia, Germany, Hungary and Poland – will be
consolidated with the South region. We are making this change in order to make
the most of the important client synergies that exist between these regions. In
addition, the streamlining and simplifying of our regional structure will yield
cost and scale advantages. Starting in the Q3 2013 earnings announcement, our
segment reporting will reflect this change. The former South region and all
countries except the Netherlands in the former Central region will now combine
to create the new Central & South region, under the leadership of Roberto
Boggio. The North region, now expanded with the Netherlands, will retain its
name and will be led by Christian Hultén. Jörgen Skoog, who headed up our former
Central Region, will now focus fully on his important role as Transcom’s
Operations & HR Director.

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
Thursday, July 18, 2013. 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.

Sweden: 08-503 364 34

UK: +44 (0) 1452 555 566

US: +1 631 510 7498

Pass code: 74440945

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

For further information please contact:

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

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 credit management services through our extensive
network of contact centers and work-at-home agents. We are 29,000 customer
experience specialists at 62 contact centers across 26 countries, delivering
services in 33 languages to over 400 international brands in various industry
verticals. Transcom WorldWide S.A. Class A and Class B shares are listed on the
NASDAQ OMX Stockholm Exchange under the symbols TWW SDB A and TWW SDB B.