Transcom reports financial results for the third quarter and nine months ended 30 September 2013

Q3 2013 financial highlights

  · Net revenue €156.0 million, a 5.3% increase compared to Q312 (€148.2
million), 7.9% adjusted for exchange rate impact
  · Gross margin 20.2%, a 1.2 percentage point increase compared to Q312 (19.0%)
  · EBIT €4.6 million compared to €1.1 million in Q312
  · EPS 0.1 Euro cents compared to -0.3 Euro cents in Q312
  · The exchange rate impact on revenue was negative €3.9 million, and the
impact on EBIT was negative €0.2 million.

Comments from the President and CEO


Revenue growth in core CRM business driven by higher volumes in all regions

Revenue in Transcom’s core customer care outsourcing business (CRM) grew by 6.0%
in the third quarter, while revenue fell slightly in the collections business
(CMS). Organic growth in our CRM business – net of currency effects – was 8.9%.
While we have signed many new clients this year, the bulk of our year-on-year
revenue increase is due to the expansion of our relationships with existing
clients. In a number of cases, we are expanding with our clients into new
geographies. This is a credit to the excellent work from our delivery teams.


EBIT increase driven by improved profitability in the Central & South and North
America & Asia Pacific regions

EBIT increased to €4.6 million this quarter, up from €1.1 million in Q3 2012.
Higher volumes and a focus on improving efficiency are the main drivers of this
positive development. I am very pleased with the progress we have made to date.
At the same time, we are very focused on continuing to improve margins. For
example, we are implementing measures to improve capacity utilization in our
North America operation. We are developing new business to be delivered in the
United States, to complement our offshore operations.

The benefits from the operational efficiency improvements we have realized in
the North America & Asia Pacific region over the past year have been partly
offset by a price decrease as a result of a contract renewal with one of our
clients.

Both our North Europe and Iberia & Latam regions need improvement on their
performance.    In the Iberia & Latam region, we have issues of low volumes and
efficiency in Chile, while we are also ramping up volumes at our new site in
Cali, Colombia. We are focused on driving margin improvements in the region, but
it is likely to be three to six months before we see the positive impact of our
efforts. In North Europe, we are implementing a new agreement with one of our
largest clients. This agreement will yield higher quality performance and better
financial predictability.

Another important area of focus is our corporate costs. Since Q3 2012, our legal
and professional services costs have escalated due to several tactical and
strategic initiatives. We have already started to reduce these costs, and our
target is to make further reductions. In Q3 2013, corporate costs amounted to
€5.7 million, compared to €6.0 million in Q3 2012 and €6.0 million also in Q2
2013.


Settlement agreements signed regarding former French subsidiary and tax claims
in Italy

As previously announced, Transcom signed a €5.3 million settlement agreement in
August, releasing it from any further liabilities with respect to the
liquidation of its former French subsidiary. The cost of the agreement is fully
covered by the provision booked in Q1 2013. The €5.3 million negative cash flow
effect impacted Q2 2013 results, as the amount was transferred to an escrow
account in that quarter, before the final agreement had been signed. I am very
pleased that we have finally been able to conclude this agreement, eliminating
the losses from our former French subsidiary. The €5.3 million cost should be
viewed in the context of the significant negative cash flows generated by the
former French subsidiary during the last few years, amounting to €12.5 million
in 2012 alone. While Transcom no longer has any operations in France, we
continue to offer French-language services to our clients from our near shore
centers in Europe and North Africa.

As announced on October 10, Transcom has reached an agreement with the Italian
tax authorities, resolving a tax dispute concerning the fiscal years 2003-2005
and 2007-2009. As a result of this agreement, the existing tax provision has
been decreased by €2.1 million with a corresponding positive effect on net
income this quarter. Achieving clarity regarding Transcom’s financial exposure
by reaching a satisfactory settlement agreement concerning these tax claims has
been an important priority. I am very pleased about the final outcome regarding
the fiscal years 2003-2005 and 2007-2009. The outstanding tax claim regarding
the 2006 fiscal year, amounting to €3.7 million – out of which €1.4 million has
already been paid – is still under discussion. We expect to be able to announce
the final outcome in the near future.

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
Tuesday, October 22, 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: 72700732

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

Pär Christiansen, CFO                                                      +46
70 776 80 16

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.