Strategy and Initiatives

1. Innovation and Sustainability

LIQ intensified the focus on developing new products and relationship solutions that can bring new revenue and better monetize the existing operations, and created, at the end of 2016, the Innovation Center.

The Innovation Center is a specific Board of Products and Solutions that gathers professionals specialized in the market and in several areas of the Company, who have worked in projects that involve new technologies and advanced tools to develop new products and services, and that are aligned with the ways consumers interact. The Innovation Center aims to identify business opportunities, analyzing consumer behavior and the way customers could access them, whether for sales, or to improve satisfaction or reduce churn.

The Company is also focused on the continuous improvement of its corporate governance practices, which are essential for business sustainability. In this sense, it is worth noting the migration to the Novo Mercado segment, B3’s highest standards of corporate governance. After the migration and the conclusion of the shareholders’ agreement, the Company has ceased to have a controlling shareholder, resulting in the pulverization of the capital stock. This movement was accompanied by changes that made the Board of Directors more independent (83% of the members are independent).

After migrating to the Novo Mercado segment, the following adjustments were necessary in order to comply with the new rules: (i) adjustments to the Bylaws; (ii) revision of policies and codes; (iii) creation of advisory committees to the Board of Directors: (a) People Committee, (b) Finance Committee, (c) Strategic Operational Committee, and (d) Audit, Risk Management and Compliance Committee.

2. Operating Efficiency

LIQ is committed to operating efficiency and is developing several activities aimed at improving operating margins and cost efficiency, key to business sustainability. The Company furthered an Ownership Simplification program that concentrated operating cash generation at Contax Mobitel, eliminating inefficiencies, reducing monitoring, system and documentation necessity, and transforming LIQ into a more integrated, efficient, and synergic as well as less bureaucratic company.

In addition, the Company held a wide-ranging action for the renegotiation of contracts with suppliers, which led to the renegotiation of the most representative contracts, purchases in larger scale and the reduction in LIQ’s main costs on an annual basis.

The Company also made important achievements in IT, with efficiency gains in the structure of links, renovation of datacenters and development of digital tools to support the business. One of the main advances was the development of new people management tools, which allow a more effective control of the Company’s headcount, given that people are the most important asset of the Contact Center area and correspond to more than 70% of the costs of services rendered, contributing to increase in operating efficiency.

It is also important to mention the role of IT in operational automation, with the creation of robots (or bots), optimization of the back-office area, development of applications and humanization of ARU, all contributing to reduce costs, and increase efficiency and quality.

The Company is also committed to improving people’s and client’s satisfaction. As a result of this effort, recent survey showed that 79% of clients say that Contax’s services are better than a year ago, and that 78% of employees are satisfied with their leaders.

3. Financial Sustainability

LIQ is committed to maintaining its financial discipline in order to conduct its business, thus seeking to strength its capital structure and improve its debt profile. The Company complied with all obligations assumed with its creditors arising from the approval of the Reprofiling in 2016.

Part of the proceeds from the sale of Allus were aimed to the payment of Debt, through the extraordinary amortization of its financial debt and of its subsidiary Contax-Mobitel, in accordance with the proportionality of amortization for each financial debt defined between the Company and its creditors in the debt renegotiation, pursuant to the fiduciary assignment agreement entered into between the Company and its creditors on August 30, 2016.

In addition, Andrade Gutierrez S.A., Jereissati Telecom S.A. and Fundação Atlântico de Seguridade Social, as controlling shareholders of CTX Participações S.A. (former controlling shareholder of the Company, extinguished after the Reprofiling), celebrated, on January 21, 2016, Investment Agreement and Other Covenants, where Andrade Gutierrez, Jereissati and Fundação undertook to make certain capital contributions in the Company through subordinated loan agreements, and also promote a primary public offering, with restricted placement efforts, of common shares issued by the Company. Although the Company has endeavored all its possible efforts and hired all the service providers necessary to carry out the Share Offering, the Offering was cancelled due to the unfavorable scenario of the domestic market and the lack of demand for common shares issued by the Company offered within the scope of the Offering.

Considering the cancellation of Share Offering, the Company released on July 8, 2016 and August 11, 2016, material facts informing that the Board of Directors approved the issue of subordinated debentures; and the holding of a restricted offering of share- convertible subordinated debentures, respectively. On August 29, 2016, all the subordinated convertible debentures object to such issue, totaling R$100.84 million, were fully subscribed and paid by CTX, Fundação and AG, pursuant to the Subscription Commitment within the scope of the debt renegotiation.

The Company will continue assessing and negotiating with its main creditors alternatives to strengthen its capital structure and extend its financial debt in order to obtain a wide consensus among its main creditors about the terms and conditions for adjusting the Company’s debt profile to its current cash generation and operating prospects.