Earnings Transcript for TLPFY - Q4 Fiscal Year 2021

Operator: Hello and welcome to the Teleperformance 2021 Annual Results Call. My name is Courtney and I'll be your coordinator for today's event. Please note that this call is being recorded and for the duration, your lines will be on listen-only. However, you will have the opportunity to ask questions. [Operator Instructions] And I will now hand you over to your host Daniel Julien, Chairman and Chief Executive Officer to begin today's conference. Thank you.

Daniel Julien: Hello.

Operator: Apologies for the delay, we are currently experiencing a technical difficulty. Please stay connected and your conference will be starting shortly. Thank you.

Daniel Julien: Hello.

Operator: -- for your patience. I will now hand you over to your host Daniel Julien, Chairman and Chief Executive Officer to begin. Thank you.

Daniel Julien: Okay. Thank you very much. If you may put the slides on the screen, this would be helpful. Okay, I cannot see the slide on the screen. I'm going to tell you that I'm very happy to have the opportunity to present you Teleperformance 2021 results and our vision for the next four years. But having said that, I cannot see the slide on the screen. I'm going to let Olivier Rigaudy who is present in the center in Paris to make the old presentation. Thank you very much.

Olivier Rigaudy: Okay. So, as a content we are -- good morning good afternoon to all. I'm going to present you the result of the -- 2021 result of the Group. We are going to cover first the key figure and highlight of FY 2021, give you some information about the objective and strategy from 2022 to 2025. And after I will deep dive into 2021 results before looking to give you much more detail on 2020 to 2022 outlook. Let's start with a figure and highlight first. I don't know if you, Daniel you can see them.

Daniel Julien: This is not working.

Olivier Rigaudy: So, first off, just to see where we are. So, Teleperformance in 2021 is at this level, we are more than close to 420,000 people along the worldwide with 70% of the people working from home. We are working in 88 country in 265 language, serving only for the groceries roughly 1,000 clients in 170 market. As you can see on this on this map, we are showing where we are and highlighting the country where we are very, I would say, important meaning Philippine, India, of course, Colombia, and also some domestic country like Brazil, U.S., and in Europe with the multilingual hub, Greece, Portugal, and specifically also Netherlands this year, given of the COVID lines that I will come back later on. What are the main stuff to keep in mind about 2021? First of all, we have achieved a record growth in 2021. We are ahead of our 2017-2022 plan with revenue of over 7 billion. Like-for-like growth which is 25.7%, which is significantly ahead of people expectation, mainly driven by an acceleration in market digitalization and revenue generating digital client up to nearly 50% in 2021. As you might remember, we have also been able to make two external growth last year with the acquisition of HealthAdvocate that has been completed in last July and Senture which was completed in December. Not only we grew, but we have been able also to have a sharp increase in profitability. The EBITDA figure is now without non-recurring item close to €1.5 billion, up 30% -- more than 30% in 2021, which is a margin of 20.7%, 100 basis point versus 2020. Decrease in EBITA before non-recurring item is 45 points -- close to 46% and exceed €1 billion -- €1.071 million for margin which is 15.1%, up 200 basis point versus 2020 and far ahead of pre-COVID level of 2019, which was 14.3%. Just to mention that all margin are up by activity and region. And not only we grew, not only we increased our profitability, but we have been able to deliver a very good cash flow €661 million, up 36% versus 2020. And that has been recognized by Standard & Poor's. That move upgrade us BBB minus to BBB in the first quarter. So, as key figure, I just wanted to remind you two things -- two acquisitions that we made in U.S., HealthAdvocate, which is a company that helps American citizen to navigate to the complexity of the U.S. healthcare system, and deliver 12,000 client, which are mainly compared -- which our company, of which 20% of them -- are part of the Fortune 500 and the revenue is €140 million. Senture, which is a business -- that is a business process outsourcing operator for public service in U.S. with revenue of a little less than $200 million. And these two acquisition are boosting group positioning in high value-added business and enhancing Group's profitability profile, sorry. Not only we made acquisition, but also this in 2021, we have been able--

Daniel Julien: The slide came on my screen.

Olivier Rigaudy: Finally, so I give you the stuff. Sorry.

Daniel Julien: It was my part of the presentation. I'm going to be happy to say. Yes, you saw the results of 2021, they were beyond our own expectations, whether in organic growth, but also our ability to make targeted acquisitions, but also there are a few information that are critical. Please don't change the slide before I ask. There are few information that critical, we generated net 30,000 jobs and we have been recognized by Great Place to Work for more than 98% of our operation, covering our employee base. We reduced our carbon footprint 15% of employee and very important at the COVID time, we have been able to deliver a good quality of service with 70% of our employees working from home. Next please. So, among the awards, I'm not going to bother you with multiple awards. One recognition that was important was by Fortune Magazine who after reviewing 10,000 other companies with had Great Place to Work had included Teleperformance as one of the World's Best Workplaces -- one of the top 25 companies among that 10,000. Next please. Although award and recognition as usual is Everest that gives its leadership grade and as you can see, Teleperformance is up to the top. Thank you very much. Next. Next. So, four years objective are extraordinarily simple. We recognize that we are in an exponentially transformative environment, everything moves super-fast. In this environment, we are going to maintain and to expand our global number one leadership worldwide. In our business goal which are the outsourcer, customer, and citizen experience management and related business series. And we are going to do that thanks to our unique global range of services from customer experience, services, to the back office, and very specific back office by vertical -- activity vertical. Thanks to very aggressive investment in digital transformation, analytic, and process. Already by the end of 2022, we are going to have more than 2,000 engineers and consultants in our transformative division, technology, analytics, and process. And we plan to go up to 5,000. Then we are going to develop and we are developing specific expertise by vertical, which means that we have people coming from the specific industry, knowing very well the pain point of this specific industry and helping to build solutions that improve the workflow. Our objective for 2025 are very simple. Like-for-like €10 billion, plus targeted specific acquisition that makes the group stronger for €1 billion to €2 billion, and improving our EBITA margin up to 16% -- from the 15% to 16%. Next please. So, the strategy, again, nothing new. We are consistent first the high-touch. We are the largest army of service in the world, enthusiastic people helping people and of course, thanks to sanction of the people, training of the people, coaching of the people, and a way to manage and as it is laid out on this slide. Next please. This unique army of service is enhanced by high-tech investment; hardware, software, knowledge. From the cloud-based solution with TP Cloud Center, the omnichannel solution, the artificial intelligence, the robotic process automation, the analytics, the Lean Six Sigma discipline, and extraordinarily important a best-in-class information security that we want at par with our clients or even above. This means a global security operation running 24/7, security operational center 24/7, multifactor authentication, network segregation, and so on. Next please. So, I thought this -- I think will help Teleperformance to deliver an outstanding quality of service and this outstanding quality of service that ensure our leadership is measured by objective key performance indicators, our clients seniority, which defines the loyalty. Our stack ranking when we are several offers to serve a client needs. How well do we do? Our Net Promoter Score, which is the client satisfaction and of course, our share of wallet evolution client-to-client. We are an agile, responsive, consistent, and scalable solution and this is maybe the most important, Teleperformance is the most scalable solution in the industry. Next please. Strategy, very simple the verticalization by client sector there is a Teleperformance, bank finance, and insurance. There is a Teleperformance for digital platform. There is a Teleperformance for -- and scale and so on. Second, adding a new line of services with the digital transformation, like for the social media, the content moderation; like for the development of the ai, the leveling [ph]; like for the development of the blockchain, the solutions for cryptocurrency. Also offering a one-stop shopping; front office, middle office, back office for our clients when they want just one integrated solution. Also very our own expertise as a service. And as I said, we are going to continue to make targeted acquisitions who are going to enrich Teleperformance portfolio offering. Next please. Fifth activity is going to be developed with a sense of responsibility and with a purpose. Corporate Social Responsibility is specific quantified at Teleperformance. First, we want to be a preferred employer in the market and these the Great Place to Work certification. Second, we are going to continue to promote diversity, gender equality, and inclusion. And we follow the ratio and we have specific proactive initiatives that everybody can see, for example, on [indiscernible] to promote diversity and inclusion. Our commitment on the SBTi targets for global warming to reach a net zero by 2040. And finally, we want to be a force of good in the communities where Teleperformance operates and give back to the community. Since our determined initiative, like citizen of the world in many others that are going to be announced during the year 2022. Please keep in mind that Teleperformance has been a signature of -- a signatory of the global U.N. compact for already 11 years. Thank you very much.

Olivier Rigaudy: I'm going to present you the figure quickly before we answer the question you are going to raise after. So coming to the figure precisely. As I told you, we have achieved €7.1 billion this year, which is a 24-week reported gross, but 25.7% like-for-like growth for the full year. And if you exclude the impact from COVID support contracts, this growth is now at 16 -- stand at 16.5%. This is absolutely amazing, the figures that we never achieved. I'll come back later on on that to you much more detail on that. Two question -- two point I wanted to make. First, we are close to €1.5 billion EBITDA by 2021 achieving 20.7% versus sales, which is a significant improvement over last year. Of course, but over 2019 the meantime. And EBITDA -- figure -- main figure crossed €1 billion to achieve -- to attain €1.071 billion, 15.1%, up 46% versus last year, and net profit €557 million, close to 72% versus -- growth versus last year. If we now enter much more detail on sales, and I know you're interested to understand what's happening on the sales. So, here you have the breakdown of the sales versus 2020 including of course, the currency effect which was negative this year, mainly due to the euro -- mainly in H1 and many are coming from the dollar and many American currencies. But after that, this 25% -- 25.7% like-for-like is breakdown between COVID support contract impact on LFL like-for-like and like-for-like growth excluding COVID contract. As you see, we increased our sales by €927 million this year from -- I would say between bracket recurring business and €515 million from COVID line. And finally, we are €64 million of change in scope link to HealthAdvocate that has been consolidated in 1st of July 2021. We try to explain you much more in detail on two years, the revenue growth analysis. Of course, this year is complex because you have to two issues; one is COVID line that we mentioned that are following a path that is not steady from a quarter to another, plus the base effect of the year of 2020 which was depressed and now better in 2021. But as well if we neutralize these two effect and trying to define a growth path for 2020 and 2021 as an average, we see that the growth is 12% over the two years. Not only we saw that, but also we see that the figure of 20 -- of Q4 is significantly ahead of people who are waiting and delivering very good figure for 2020 -- for the last quarter, that is promising for 2022 as you can imagine. Let's move now to the detailed growth for the year and for the quarter. What is amazing here just to see you have the breakdown of the 25% across the different division and across the different, I would say, geography. Interestingly, in Q4, we grew by 13.3%. In fact, if you take out COVID, it's a little less, but 11%, while we were facing a very, very hard comp to beat versus last year, which was tough to beat, notably in Europe, but not only in Europe also in LLS. And hear you can see that all the company, all the region are growing very fast. Even in U.S., we are back on track and we deliver a very good acceleration of market in Q4. This is, as I told you, very interesting for the big -- for the start of 2022. And of course, on specialized service not only we continue to grow on language line solution, but we also enjoying gradual recovery into TLS contract business not at the level we had before, but starting to come back to a better pace. If we move now to the result by activity, I would say few things to tell except that all figure, all over geography, all region are progressing -- are improving versus last year, achieving record figure notably in India that you can see we are achieving 18.2%. This is a result of the management of management picking the right contract to deliver the right -- improve figure, but also a very big growth in CEMEA and nobody thought it could be possible to achieve close to 14% margin in 2020 in CEMEA, while Ibero-LATAM is continuing to deliver a very good figure. EWAP is improving again and Specialized Service came back to the level that we were knowing in 2019. Notably with language line solution, but also the improvement of TLS back to normal. Not exactly back to normal, but on the base to be back to normal. If we move now to the region, I would say, notably in English world, of course, you see the figure of 12.5% growth in Q4, while facing tough comp notably in U.K., but now we have a gradual acceleration along the euro in North American market which is satisfactory and Asia-Pacific, very good activity in Southeast Asia. So, margin is improving as you can see by 110 basis point -- by 90 basis points sorry. Moving to -- now to sorry, I skipped Ibero-LATAM, which was a mistake. Very good, very good expansion in Ibero-LATAM, 18.3% in Q4 versus 26% for the full year, of course, comps were tough to beat also in Q4. Strongest -- very good growth, I would say everywhere Colombia, Peru, nearshore, Argentina and even Portugal and even Brazil which is not there, but everywhere we are enjoying good growth and margin are growing very fast by 160 basis point in 2021. If we move now to Europe, Europe, 41% growth -- like-for-like growth, of course, this is important link -- this is link partially significantly sorry for the COVID support contracts that are going to dry up. That was supposed to dry up, but I'm not sure they're going to dry up so much in Q1 2022 and we have, of course, clear comps to beat, difficult in Q4 that we have still a 10.7% growth in Q4 and a significant improvement in margin as we can see more than 400 basis points. Let's finish core service by India, growing at a lower pace, but it was maintained, it was under control. This is managed and achieving the best cost service figure margin across the group to 18.2%, a very good level. To end the presentation on that Specialized Service. So, back on track 14.5% growth in Q4, close to 20% for the full year. Again, growth in the margin to 30.2%. You have, of course, language lines that continue to deliver good margin. TLS, that is back on track, even if it's not at the level that it was in 2020 -- it was in 2019. And of course, six months of HealthAdvocate that is delivering very good figure as planned. Quick word about the rest of the P&L, very few things to tell about figure beyond -- below EBITDA, mainly the increase of the cost of financial plan, which is linked to the fact that stock prices increasing, while were no this year, any goodwill impairment in 2021. To finalize the analysis, financial ratios that are showing a decrease -- degradation this year, but in fact, we decided to repay in advance some private -- U.S. private placements, but if we exclude that, the financial charge would have been lower. And it is absolutely promising for 2022 because this cost will be down also in 2022. Income tax back on track to the 28% that we were knowing the past even the fact that we have no impairment of loss of goodwill this year and the net profit that is €557 million, which is 9.4 -- €9.36 per share. Quick word on cash flow, because this is probably the most interesting stuff, the cash flow not only increased because of the EBITDA, you understood but the change in working capital has been limited to €75 million while the group was growing by €1.4 billion in sales. And I just wanted to highlight that point. this is a really an achievement and in the meantime, we have been able to control the CapEx, not only in percentage given the increase in sales, but also in value, even the fact that we were having CapEx were mainly used on IT and not really on new workstation in 2021. I'm not going to spend much more time on balance sheet, but I just wanted to stay a minute there to see that finally, to show evolution of the group today in the dead groups that moved from 2.2 to 2.6. In fact, in 2021, we have been able to finance HealthAdvocate and Senture acquisition for close to €1 billion, with only an increase in debt of €382 million versus last year. This is a remarkable, while we continue to pay -- to serve a good dividend. And finally we land a net debt EBITDA below 2% with ratios that is -- a previous ratio, which is 1.8%. But if you exclude some Q, is 1.75^. And I'm sure you understood that the fact that to be improved, r rating by Standard & Poor's in such troubled market, notably in debt market is absolutely an asset as we speak. Just a word about total debt, I am not going to spend much more time on that, but clearly all gross debt was 1.3% and I do believe it's going to be down again in 2022. Lastly, if I -- we are going to propose to the general meeting a dividend of €3.3 per share, which is an increase of 37% versus last year, with a stable payout ratio of 35%. I'm going to finish with the outlook for 2022 and after open the floor for question. We guide the market, we decided to guide the market, to have a double-digit like-for-like revenue growth above 10%. We do believe that if you exclude COVID line that we have hard time to predict for 2022, we are going to grow above 10%. Of course there will be a decrease in contribution from COVID support contract, no doubt on that. Probably much more starting in the Q2, Q3, Q4 and Q1 and like-for-like revenue, if you take into account this decrease in contribution from COVID report, we believe it will be above 5%. On top of that, we think that -- we announced that we are going to be 30 basis point increase in EBITDA margin by the end of this year of 2022. And as mentioned by Daniel, we are looking for further targeted acquisition. That's the end of what I wanted to say. And of course, we are ready to take your Q&A -- your question--.

Operator: Thank you. [Operator Instructions] And our first question comes in from the line of Oscar Val calling from JPMorgan. Please go ahead.

Oscar Val Mas: Yes. Good afternoon, everyone and congratulations on the result. I had two questions. The first one if you could touch upon wage inflation, and where are you seeing that in your markets? And how you can pass that through? That's the first question. And then the second question is on the underlying growth. Could you explain that this is taking market share from competitors? Is it new outsourcing, is that -- yes. Those are the two questions. Thank you.

Daniel Julien: Wage inflation is a characteristic that is developing more or less all over the world. Of course, it started more significantly in the USA. We are integrating this element in our 2022 forecasts and we have been mostly able to pass it through. That's the first point. The second point the underlying growth. I think it's an underlying growth of the volume of interaction between the customers and the companies they buy product and services from that come from the fact that there is more and more subscription model, there are more and more technology, more and more ecommerce, more and more digital platform and this fuels more interaction. I also think that [indiscernible] goes faster than the market due to the fact that the leaders and specifically in times are a little bit disturbing, the leader have an advantage. We have the credibility, we have the security and basically I would say that last year, we generated 50% of our volume with digital helping digital services, whether digital companies or traditional companies in their digital activity. This is the main fuel of the growth.

Oscar Val Mas: Thank you.

Operator: The next question comes in from the line of Anvesh Agrawal calling from Morgan Stanley. Please go ahead.

Anvesh Agrawal: Hi, good evening, I got three questions actually. First, just the -- just a technical one. You're saying that digital customers are about 50% of volume. I believe this number was more like mid-30s when last reported. So, just want to check if there was a change in definition or you've seen sort of a pickup in Q4?

Olivier Rigaudy: It's a definition. We define the stuff differently and I'm going to send you the definition precisely. But there is also an increase -- a significant increase for our digital business all along this year.

Anvesh Agrawal: And then the second question is -- I mean you partially answered in the previous one, but we have had some sort of digital companies having some softer result? I mean, look at Facebook, Netflix, Roblox yesterday, and EU seem to be growing much faster than sort of what's happening in the entire U.S. digital space. Can you just tell us like the more how you're able to go faster than -- when the entire sort of marketplaces seems to be slowing down? And then third question is your guidance of around €10 billion of revenue, am I right in thinking you sort of roughly baking in around 8% like-for-like growth over 2022 to 2025, isn’t that guidance?

Daniel Julien: First, Teleperformance is a customer and citizens service company, which means that we are extraordinarily useful to help to reduce frictions. So, there could be a correlation between how well one of our client can perform and the development of the volume of Teleperformance, it's not necessarily related. Very specifically to give an example, if an airline company is -- has trouble, they are not going to grow their topline, but Teleperformance is going to do much more activity. That was just an example, well to understand. Second, when Teleperformance grew very much the service around the digital platform, it's not just a social media platform, but it's also the whole economy that is in transformation, the bank finance, for example, you are the new bank, and you have an incredible groups of the new banks. You have the Fintech, you have the Buy Now Pay Later, and you have an incredible growth of that. Same for the e-commerce activities. You can see in the brick retailer of -- brick-and-mortar retailers, you can see the progression in digital, and we are here to combine them. So, I think that whatever is the specific of one company or another, there is moving more digital transformation, more and more direct relationship between the customers and the companies and this fueled the growth of Teleperformance.

Anvesh Agrawal: Okay. And then just sort of what you're baking in within your 2025 guidance for like-for-like?

Olivier Rigaudy: It's a computation that -- it's a CAGR that is around 9% -- 8.8% if I'm not mistaken exactly. This is the €10 billion figure for 2025 is some -- threshold to get. Maybe we can get more, maybe -- I don't know. But today, it's makes growth of roughly 9% CAGR from 2020 to 2025.

Daniel Julien: Yes, and 9% CAGR, but thought without neutralizing the impact of COVID when we think that probably the largest part of business that was related to COVID was more behind us than front of us.

Anvesh Agrawal: Yes, that's clear. Thank you.

Operator: The next question comes in from the line of Simona Sarli calling from Bank of America. Please go ahead.

Simona Sarli: Good evening, gentlemen. Thanks for taking my questions. So, a couple of them. So, first of all, going back to your medium term guidance inorganic revenue CAGR close to 9%. You mentioned also in one of your slides that you have achieved, like-for-like organic revenue CAGR close to 12%. So, just to try to better understand what are the underlying assumption for your medium term growth and what are the moving parts of that might be -- bring you to deliver double-digit organic growth in the medium term? That's the first one.

Daniel Julien: Okay, on this first question I'm going to answer. It's always easier to look at the number of the past than to define the number of the future and if Teleperformance as the characteristic, its systematically to deliver what we have projected for the future. Honestly, our people can be more optimistic, more pessimistic. I'm a reasonably conservative. And by the way, right now, I hope that the situation in Europe is still peaceful, so we can develop our business properly.

Simona Sarli: Thank you. And during one of your previous presentations, you also mentioned new vertical outsourcing opportunities with government agencies. Is that enough data that you can provide on that front if you have seen any new contracts coming in?

Daniel Julien: We have seen a lot of new contract coming in within 2021 and we think we're going to see also a lot coming in within 2022. At the same time, the reality of the economy is you have part that goes up and part that goes down. You have less dynamic businesses also. And if the equation is the Teleperformance successful in business development and ending in specifically in the dynamic segment of the economy, the answer is yes.

Simona Sarli: Thank you. And one last one. At the beginning of the presentation, you mentioned that you have now roughly 65% of your workforce working from home, is that sustainable in the medium term? And what would you say is the cost of demonization opportunity? And also considering that in 2022, you're getting for a margin improvement of 30 basis points year-over-year, how much of this margin improvement is coming from the cost optimization opportunity? Thank you.

Daniel Julien: Lot of questions in one. The very first one is that there is a big question mark about the organization of the work is going to be in six months or one year from now. They are contradictory forces. Some forces that push the worlds going back to brick-and-mortar specifically for data security concern, for loyalty concern, for -- even Mental health of the employees concern and so on. And you have exactly the antagonistic forces, people who prefer to stay in work from home. There will be, of course, a balance. Where is going to be the balance? I just don't know. We are ready for all case of figures understanding that this is going to be -- any kind of adjustment is not going to be welcome, because it's going to be more work, more cost, but there will be adjustments. So, if in one year from now, we are at 50/50 I will not be surprised. If we are 60% brick-and-mortar and 40% work from home, I will not be surprised. But I don't know who can say what it will be. I'm going to give you an example. Over the last six months, regularly, publicly, the largest companies of the world have said that they are going to bring their own employees back to their office at the end of a specific quarter or at the end of next quarter and so on. Right now, no one of the predictions that was given as been effective. So, we know we are going to have to deal with some challenges. What is going to be the magnitude of the challenges is pretty uncertain. Are we solid and are we confident that we are going to be able to deliver and keep our margin? Yes, because we have different levers that we can use to adjust to the situation.

Simona Sarli: Thank you.

Operator: The next question comes in from the line of Christophe Chaput calling from ODDO. Please go ahead.

Christophe Chaput: Yes. Good evening, gentlemen and thank you for taking my question. I've got three if I may. The first one is coming back to your margin -- in your EBITDA margin for 2022. So, obviously 30 bps with benefit from TLS. But could you give us as well granularity on geographies? And the main that are going to benefit from the leverage? Regarding 2025, you mentioned 16% for the EBIT margin, is it like-for-like or with acquisition? Or it doesn't really make any difference?

Daniel Julien: It's like so like, in any case in like-for-like, it would be 16% and with acquisition, it can be -- there can be an upside or it can be no difference. I still don't know because the acquisitions are still not here.

Christophe Chaput: And the last one is, you say that the digital clients represent 50% of the sales, can we have a rough idea of the average of the market share on these clients? And how does it compare versus, let's say, traditional clients?

Daniel Julien: I think that the wisdom of the economic leaders all around the world is widely shared, which means that is very rare when large client was large business wants to put all its eggs in the same basket. So, having said that, a number of the new economic clients tend to be smaller than some of our blue chip companies. And in that case, the share of wallets that one player can enjoy with these clients tend to be larger, doesn't mean that we are going to have 100% and be the only one partner and I would not even recommend that to our clients.

Christophe Chaput: Just to understand let's imagine that with traditional -- again you got, I don't know, 30% market share and in typical client, let's say, 10% market share or below, is there a reason why the market share in digital client should be below the traditional one?

Daniel Julien: No, I said exactly the opposite.

Christophe Chaput: Yes, and the question is how fast you can improve let's say the--

Daniel Julien: No, I mean, if you want we can have outside of this discussion, a specific discussion to try to approach a decent answer to your question. Frankly speaking, I'm unable to answer.

Christophe Chaput: Regarding the 30 bis in 2022 by geography if you get some commonality, it would be it will be great?

Daniel Julien: We are not -- to give you a stick to beat us. There are so many multiple factors that can change the situation from a geography to another that start to give to the market, a level of granularity for objectives in the future would be extraordinarily inappropriate because we do not master everything. Of course, they are going to be pieces of our business are going to be better than what we are expecting in pieces of our business that are going to be worse that we are expecting. And so that's the reason why for each category of information will define different level of granularity. You can have the granularity on the past, you -- we are unable to be specific granularity on the figure. I'm not the master of the market shares and of the battles of the different clients on one specific vertical.

Christophe Chaput: Okay. Thank you.

Operator: The next question comes in from the line of Patrick Jousseaume calling from Société Générale. Please go ahead.

Patrick Jousseaume: Good evening Daniel and good evening Olivier. The first question speaking about granularity is the margin on COVID contracts. You get the €550 million revenue on -- additional revenue on these contracts. And I know that these contracts are all in Europe and in Europe improve your EBITDA by some around €30 million. When I do the math and I accumulated is a very simplistic, but it should lead us to a 25% margin on the COVID contracts. Could you elaborate a bit on that?

Daniel Julien: No, I cannot elaborate too much. What's for sure is that on some COVID contracts, you have a kind of -- you tend to have a positive effect because we have been running aboard our traditional SG&A ratios for some period of peaks. It's always the same case when you are at peaks.

Patrick Jousseaume: Okay. And can I ask a second question?

Operator: Please go ahead.

Patrick Jousseaume: And so, well, assuming that, the margin of COVID contracts is higher than the margin for the whole group, I guess that, your plus 30 basis points margin improvement that you expect for next year is probably -- or for this year -- sorry, is probably bigger if you would exclude the COVID contracts. So could you also elaborate on that?

Daniel Julien: No. I'm not sure. Honestly, it's something that we can take also offline and Olivier will be able to answer you. But when we take all our COVID business, all our COVID business, EBITA versus top line I'm not sure of what you said. Honestly, I did not check it specifically. We are going to make the calculation. But when you take all the COVID business we made around the world and in the different geographies, and I'm not sure of your calculation.

Olivier Rigaudy: You're right, Daniel. We are not.

Daniel Julien: Olivier is going to follow-up with that.

Olivier Rigaudy: We are not so different from the total. There are some, in some places, yes, but in some place, not, but as a whole, it's not changing totally the game.

Daniel Julien: I'm saying as a whole. As a whole, I'm pretty sure that, we are not, that is not so different. So again, it's a question, we need to check the specifics and answer you. But it's not that suddenly the COVID has been a drag for the group.

Operator: The next question comes in from the line of Antonin Baudry calling from HSBC. Please go ahead.

Antonin Baudry: Hi. Good morning, gentlemen. Congratulations on my side for these results and the visibility for 2025. I have two questions please. The first one is on the CapEx and free cash flow generation, which kind of CapEx intensity should we expect during the next planned 2022, 2025 period? Should we expect to another 3.5% of revenues in the coming months? That is my first question.

Olivier Rigaudy: From your microphone, but we are probably around 3.5% for the next year in terms of intensity of CapEx. We have a hard time to listen to you because--

Antonin Baudry: Is 3.5% sustainable in 2023 to 2025?

Olivier Rigaudy: Yeah, yeah, yeah. Well, to be honest, the forecast for 2022 is quite solid. But for 2024, 2025 I don't have a precise plan of the CapEx, but it makes sense to be in this range of 3.5% because, of course, you have much more you might have less CapEx from brick-and-mortar, but also much more from IT and from laptop and from stuff like that. So 3.5% seems to be correct today.

Antonin Baudry: On my second question, not possible to split your growth between existing clients or new clients in 2021 on the trend that you expect in 2022?

Olivier Rigaudy: We are going to stay roughly in the same approach, meaning in the range of -- I would say more than new clients are probably in the range of 60 to 40.

Antonin Baudry: 60,000 for new clients.

Olivier Rigaudy: I don't know, if there are other questions, maybe we have to take the last two questions.

Operator: The next question comes in from the line of Nicolas Tabor calling from Stifel. Please go ahead.

Nicolas Tabor: Hi. Good evening, gentlemen. Thank you very much for taking my question. The first one, quickly would be if you have an indicative trend of what you are seeing right now with the COVID contracts in Q1 and how we should think about them. I mean, you said, should still be there in Q1. What do you expect for Q2? I understand, it's low visibility but just to have an idea. And then the second question, looking forward your 16% margin target for 2022 at constant scope. I was trying to understand how much was coming from potential evolution from working from home with lower leasing and depreciation expenses and so on. And how much would come from just operating leverage? And then finally, just specialized services being a higher share of the mix, I mean, how do you model that? Because I guess you've done the math in detail, just to see how we should think about it as well? Thank you very much.

Olivier Rigaudy: So on margin, of course, I'm not going to answer the question differently that was not answered by Daniel about, how we are going to split different stuff. But it's clear that the fact that in specialized services, the increase of TLS that we expect, plus the Health Advocate impact should have an impact on the margin that's clear. That's -- clearly. But I do expect no bigger change elsewhere. The only question, and clearly, the visibility on COVID line are absolutely, I would say, nil. We have 15 days maybe sometimes less in advance. What we do expect that there will be still COVID line at least until March, April. After, they are going to dry up. Probably, it's starting already to dry up but not at the same -- not -- they are still testing in vaccine line. So it's difficult to tell. So that's the reason why we are careful about that. But what is sure of is that, there will be probably much more COVID line in Q1 than people expected, I would say, last year.

Nicolas Tabor: Great. Thank you very much. And finally, just the last one. Can we -- can you say that your guidance for the 5% plus organic growth is as conservative as it usually is at the beginning of the year?

Olivier Rigaudy: What I'm just telling is that, of course, and Daniel mentioned it, we are committed to deliver. So if we are able to do better, we'll do better. But this is difficult to be much more precise today, mid-February.

Nicolas Tabor: Great. Thank you very much, and congratulations, again.

Operator: The final question comes in from the line of Laurent Gélébart calling from BNP Paribas Exane. Please go ahead.

Laurent Gélébart: Good evening, Daniel. Good morning, Oliver. Laurent speaking from BNP Exane. Just one question for you, Daniel, you're shooting to the midterm plan to 2025. I would like to know if you are going to run the business up to the end of this plan.

Daniel Julien: Typically, the human being propose and God decide. Right now, I'm here to present you 2021 to present you 2022, you are going to see me in 2023 to present you the results of 2022 and then we all will decide, the Board, the shareholder and myself.

Laurent Gélébart: Okay. Thank you, Daniel.

Daniel Julien: And I just want to thank you, everybody, who were here on this call. I deeply apologize for the very, very bad quality of the connections that we had today. Usually, it's clearly smoother than it has been. But in any case, what is important is the message, and the message is Teleperformance did well in 2021 and is going to do well in 2022. Thank you very much.

Olivier Rigaudy: Thank you to all.