Quess Corp Limited — Earnings Release 2020

Jan 29, 2020

January 29, 2020

To

The General Manager Department of Corporate Services, BSE Limited, 1st Floor, New Trading Ring, Rotunda Building, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001

Security Code - 539978

The Manager Department of Corporate Services, National Stock Exchange of India Limited Exchange Plaza, Sandra- Kundra Complex, Sandra (East), Mumbai - 400 001 NSE Symbol - QUESS

Dear Sir/Madam,

Sub: Submission of information pursuant to Regulation 30 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015

We are enclosing herewith a copy of Press Release dated January 29, 2020 titled "Quess Corp delivers resilient and consistent performance".

Kindly take the same on record.

Thanking you,

Yours faithfully, For Quess Corp Limited

w

? Kundan K Lal .S Company Secretary and Compliance Officer

Quess Corp Limited

Ouess House, 3/3/2, Bellandur Gate, Sarjapur Road, Bengaluru-560 IQ3, Karnataka. India Tel: +91 80 6105 6001 I connect@quesscorp.com I GIN No.L74140KA2007PLCOt.3909

29th January 2020

BSE: 539978 I NSE: QUESS I ISIN: INE615P01015 I CIN: L74140KA2007PLC043909 I WWW.QUESSCORP.COM

Quess Corp delivers resilient and consistent performance

Bengaluru, India – 29th January 2020: Quess Corp, India's leading business services provider announced its financial results for the third quarter (Q3 FY20) ended 31 st December 2019 today. The key consolidated financial parameters are:

(in ₹	cr)

Particulars	Q3' 20	Q3' 19	YoY(%)	Q2' 20	QoQ(%)	9M' 20	9M' 19	YoY(%)
Revenue	2,950	2,172	36%	2,651	11%	7,997	6,232	28%
EBITDA	179	118	52%	162	10%	489333		47%
EBITDA Margin	6.07%	5.43%	64bps	6.11%	(4bps)	6.11%	5.34%
PAT	75	65	15%	67	12%	198181		9%
PAT Margin	2.54%	2.99%	(45bps)	2.53%	1bps	2.48%2.90%		(42bps)
Diluted EPS(in ₹)	4.83	4.36	11%	4.23	14%	12.78	12.33	4%

Financial Highlights (Q3 & 9M FY20):

• Revenues grew 36% YoY (organic growth of 31%) and 11% QoQ (all organic). The annual organic growth was driven by steady increase in general staffing (up 37%) and CLM (Conneqt - up 13%)
• 9M' 20 revenue was up 28% to ₹ 7,997cr
• Quarterly EBITDA grew significantly by 52% YoY and 10% QoQ to ₹ 179cr. EBITDA margins were up 64 bps YoY to 6.1%
• 9M' 20 EBITDA was up 47% to ₹ 489cr
• Reported PAT for the quarter grew 15% YoY and 12% QoQ to ₹ 75cr, while Operating PAT was ₹ 79cr, up 22% YoY and 10% QoQ
• Reported PAT for 9M' 20 was up 10% YoY at ₹ 198cr
• Basic Earnings per Share (EPS) stood at ₹ 4.84 for Q3' 20 and ₹ 12.80 for 9M' 20
• Cash flow from Operations (OCF) stood at ₹ 74cr for Q3' 20 as against ₹ 53cr in Q3' 19, a significant increase of 39% YoY
• OCF/EBITDA conversion improved to 51% during Q3' 20 compared to 45% in Q3' 19
• Debt reduction by ₹ 431cr in the last 6 months to ₹ 830cr

Corporate Actions:

• Management Change: Mr. Suraj Moraje joined as Executive Director and Group CEO (Designate) on November 4, 2019. His addition to the Management team will help drive Quess' digital transformation journey.
• Thomas Cook India Ltd. (TCIL) De-merger: The de-merger of TCIL was completed during the quarter. Post the de-merger, Quess is directly held by Fairfax Holdings (~33% holding). Consequently, Quess gains an entry into training in the B2C segment of Travel & Hospitality space.
• Rationalisation of Intercompany Loans: Quess continues to reduce the intercompany loans and advances, which stood at ₹ 442cr at the beginning of the quarter. It successfully reduced ₹ 270cr in the quarter by repayment and conversion into CCDs for Conneqt and Trimax Smart Infra. With these, the intercompany loan balances stood at ₹ 172cr at the end of the quarter.
• Optimization of Group Structure: Quess' strategy is to simplify its overall group structure and in line with this strategy, 4 Indian subsidiaries – Aravon, CenterQ, CoAchieve and Master Staffing Solutions were merged into the parent during the quarter. Additionally, MFX Chile was wound up during the quarter.
• Trimax Resolution: In the Ahmedabad Smart City Project, out of the total project cost of ₹ 230cr, ₹ 92cr was collected till Q3' 20 & an additional ₹ 40cr is expected by Q4 FY20.
• Additional stake purchase completed:
  • 30% in Goldenstar for a consideration of ₹ ~40cr
  • 18.71% stake Vedang for a consideration of ₹ ~8cr
  • 49% stake in Trimax Smart Infra for ₹ ~13cr
• Launch of New Brand: The new branding campaign is in-line with Quess' move to its new platform structure. 'Winning Together' comes from Quess' continued focus on its customers, people and investors.
• Awards: Quess was certified as a "Great Place to Work" and included in annual Best Workplace List for the year 2020. It is one among the top 300 out of 1000+ companies. The certification is considered the 'Gold Standard' and is recognized World over by employees and employers alike.

Business Updates:

Quess has continued to deliver strong growth across operational and financial parameters.

The key business updates, split platform-wise, are as follows:

Workforce Management Platform:

• Associate Headcount up 34% YoY to 260,000
• Strong Growth in Staffing: Quess' General Staffing business continued its strong growth trajectory, registering headcount addition of 67,000 associates over the last four quarters The General Staffing headcount crossed 244,000
• Strong hiring process demonstrated by deploying ~20k associates to meet peak festive demand in a single month
• 82 new logos were added with a combined ACV of ₹ 94cr
• Collect & Pay contracts share was maintained at 72% in the quarter, up 1,200 bps YoY
• General Staffing business' Core to Associate ratio continues at industry leading efficiency of 1:333 in Q3 FY20. The ratio improved by 11% YoY
• Our exclusive IPR has covered 61 skilling courses out of 91 in the skill development business

Operating Asset Management Platform:

• Our Facilities Management business continued its strong organic growth momentum during the quarter with revenue up 11% YoY to ₹ 347cr
• IFM continues to improve SLA vs headcount business ratio up from 22:78 to 26:74 YoY
• The Revenue realization per head-count was steady at ₹23,000

Tech Services:

• Our Tech Services business reported a strong revenue growth up 19% YoY to ₹ 544cr from ₹ 456cr owing to 13% increase in Conneqt and the Allsec acquisition
• 44 new logos were added across businesses with ACV of ₹ 43cr
• Our service area network in the Digicare business now covers over 12,500 pin codes
• Monster: Search module is in beta test, with positive early reviews. We have a roadmap in place for the remaining module and this is expected to be completed by early part of the next financial year. Key operational parameters continued to see growth:
  • Organic site traffic increased 83% YoY
  • Job views up 102% YoY to 2.9mn from 1.4mn
  • Average monthly job postings in Monster up 44% QoQ from 57k to 82k

Segment Wise Performance

(In ₹ cr)

Platforms	Q3' 20	Q3' 19	YoY(%)	Q2' 20	QoQ(%)	9M' 20	9M' 19	YoY (%)
Workforce Management
Revenue	1,959	1,285	52%	1,669	17%	5,116	3,641	41%
EBITDA	103	77	34%	91	13%	284	214	33%
EBITDA Margin	5.3%	6.0%	(75bps)	5.5%	(17bps)	5.5%	5.9%	(40 bps)
Operating Asset Management
Revenue	448	431	4%	432	4%	1,306	1,264	3%
EBITDA	33	34	(2%)	29	14%	94	98	(4%)
EBITDA Margin	7.4%	7.8%	(44bps)	6.7%	69 bps	7.2%	7.8%	(60 bps)
Tech Services
Revenue	544	456	19%	551	(1%)	1,575	1,327	19%
EBITDA	66	28	131%	63	4%	175	78	124%
EBITDA Margin	12.1%	6.2%	585bps	11.5%	59 bps	11.1%	5.9%	520 bps

Commenting on the financial results, Chairman & MD Mr. Ajit Isaac said that*, "This quarter saw us continuing to execute our corporate initiatives with significant improvement in business operations and corporate structure. While we delivered a 36% growth in revenue and a 52% growth in EBITDA, our focus on other key financial parameters in the form of cash generation, debt reduction and interest cost reduction has been robust. We have strengthened our leadership team with the addition of Mr. Suraj Moraje, as Group CEO (Designate) & Executive Director, who joins us with over 2 decades of experience at McKinsey & Company and will drive the digital transformation journey of the company."*

About Quess Corp

Quess Corp Limited (BSE: 539978, NSE: QUESS), is India's leading business services provider. At Quess, we excel in helping large and emerging companies manage their non-core activities by leveraging our integrated service offerings across industries and geographies which provides significant operational efficiencies to our clients. Quess has a team of over 385,000 employees across India, North America, South America, South East Asia and the Middle East across platforms such as Workforce Management, Operating Asset Management and Technology Services. Quess serves over 2,600 clients worldwide. Established in 2007, Quess is headquartered in Bengaluru, India and has a market cap of approx. ₹ 7,133cr as of December 31 st, 2019.

For further details on Quess Corp Ltd., please visit: http://www.quesscorp.com.

For more information, please contact:

Investor / Analyst contact: Media Contact:

Subramanian Ramakrishnan Chief Financial Officer ramki@quesscorp.com +91 80 61056208

Girish H.M Vice President – Marketing & Communications girish.m@quesscorp.com +91 80 61056019

Disclaimer: This document contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial condition of the Company. These statements can be recognized by the use of words such as ''expects", "plans", 'will", "estimates", "projects", or other words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in such forward-looking statements as a result of various factors and assumptions, which the Company believes to be reasonable in light of its operating experience in recent yea₹ The risks and uncertainties relating to these statements include, but not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth, competition, our ability to manage our international operations, government policies, regulations, etc. The Company does not undertake any obligation to revise or update any forward looking statement that may be made from time to time by or on behalf of the Company including to reflect actual results, changes in assumptions or changes in factors affecting these statements