Zalaris Asa · OSL:ZAL
Zalaris Asa — Q4 2019 Earnings Presentation
34 slides from Zalaris Asa's earnings presentation, Feb 28, 2020
Slide 1: Interim and preliminary full-year presentation Q4 2019
– Value people Interim and preliminary full-year presentation | Q4 2019 28 February, 2019
Slide 2: Agenda
Agenda • Highlights • Operational review • Financial review • Market update and outlook • Appendix Hans-Petter Mellerud Gunnar Manum Founder and CEO CFO © Zalaris 2020 Page 2
Slide 3: Fourth quarter 2019: All time high revenue
Highlights Fourth quarter 2019: All time high revenue • All time high revenue of NOK 206.2 million for the quarter (+6.2%) and NOK 776.8 million for the full-year (+4.2%) - the 19th year of uninterrupted growth • Adjusted EBIT of NOK 5.1 million (NOK 12.5 million), and adjusted EBIT for the full- ye
Slide 4: Several large renewals and new customers
Highlights Several large renewals and new customers • 5-year renewal with Yara for the provision of multi-country HR services including payroll, time & attendance, and travel expenses • 4-year extension (up to 5,000 man-days of consulting) with the German state North Rhine-Westphalia, to be delivere
Slide 5: Agenda
5 Agenda • Highlights • Operational review • Financial review • Market update and outlook • Appendix
Slide 6: European Payroll & HR Solutions that Value People
Operational review European Payroll & HR Solutions that Value People Zalaris – Local presence with one global platform • Zalaris is a leading provider of Payroll and Human Capital Management Services delivered through Headquarter Software as a Service (SaaS) and Business Process as a Service (BPaaS)
Slide 7: Attractive and growing market proven to be resilient over time
Operational review Attractive and growing market proven to be resilient over time Strong underlying European market growth expected Key market trend MPHRO1) Market MCPO2) Market BPaaS3) Market (2017) Increasing focus on the overall 7-8% 19- 75-80% workplace experience 7% 18-21% 65- 21% 20% 60- 70% 6
Slide 8: All time high revenue during the quarter (NOKm)
Operational review All time high revenue during the quarter (NOKm) Managed Services Professional Services +12% +6% +9% 0% 276.0 291.4 105.5 94.4 144.1 143.7 139.4 135.0 156.4 49.7 48.7 48.1 55.7 49.8 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 2H-18 2H-19 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 2H-18 2H-19 ▪ Increased acti
Slide 9: Restructuring program has reduced headcount by 52 employees
Operational review Restructuring program has reduced headcount by 52 employees, with minimal impact on market facing capacity -24 453 429 -3 275 272 -25 162 137 0 22 22 Payroll & HR Consultants Admin. & Support Infrastructure Outsourcing © Zalaris 2020 Page 9
Slide 10: Professional services impacted by restructuring program
Operational review Professional services impacted by restructuring program - EBIT (NOKm) and EBIT margin (%) Managed Services Professional Services 12,9% 21,7% 10,1% 10,6% 10,5% 10,3% 10,4% 11,1 8,7% 14,4% 14,5% 11,8% 8,1 30,3 7,7% 10,8 6,2% 23,9 8,1 15,3 18,0 16,1 7,0 14,5 14,2 3,0 0,1% 0,0 Q4-18 Q
Slide 11: Agenda
11 Agenda • Highlights • Operational review • Financial review • Market update and outlook • Appendix
Slide 12: Condensed Profit and Loss
Financial review Condensed Profit and Loss 2019 2018 2019 2018 (NOK 1 000) Oct-Dec Oct-Dec Jan-Dec Jan-Dec Revenue 206 235 194 153 776 807 745 434 License costs 23 911 18 636 67 981 60 492 Personell expenses 117 158 104 258 438 403 426 623 Other operating expenses 44 418 45 259 166 887 177 823 Amort
Slide 13: Significant positive cash flow during the quarter (NOKm)
Financial review Significant positive cash flow during the quarter (NOKm) -7,9 -11,8 39,7 6,1 -6,4 -5,2 -6,5 0,1 21,7 64,8 82,4 Cash Q3 2019 EBITDA NWC Net movement Capex Interest Lease Loan Treasury Other Cash Q4 2019 customer payments payments repaymets shares projects ▪ Operating cash flow for qu
Slide 14: Condensed Balance Sheet
Financial review Condensed Balance Sheet 2019 2018 (NOK 1 000) 31. Dec 31. Dec Fixed and intangible assets 350 364 330 252 Trade accounts receivable 148 596 158 118 Customer projects assets 92 628 97 272 Cash and cash equivalents 82 448 107 844 Other assets 30 922 32 121 Total assets 704 958 725 607
Slide 15: Agenda
15 Agenda • Highlights • Operational review • Financial review • Market update and outlook • Appendix
Slide 16: Grow2020 to focus on utilizing the scale of Zalaris' Sustainable Business Model
Market update and outlook Grow2020 to focus on utilizing the scale of Zalaris’ Sustainable Business Model 1 2 3 Diversified business model with Attractive and growing market Regional HRO leader blue-chip client base proven to be resilient over time Uniquely positioned towards multinational Zalaris i
Slide 17: Our goal for 2020 is besting ourselves
Market update and outlook Our goal for 2020 is besting ourselves by staying close to our values of Aiming high, Teamwork and Endurance – and to deliver on our stakeholders’ expectations • Grow2020 - delivering on our expectations of continuing 19 years of uninterrupted growth • Utilizing the scalabi
Slide 18: We open for questions
Ay ZALARIS We open for questions
Slide 19: Agenda
19 Agenda • Highlights • Operational review • Financial review • Market update and outlook • Appendix
Slide 20: European Payroll & HR Solutions that Value People
Appendix European Payroll & HR Solutions that Value People Zalaris – Local presence with one global platform • Zalaris is a leading provider of Payroll and Human Capital Management Services delivered through Headquarter Software as a Service (SaaS) and Business Process as a Service (BPaaS) models •
Slide 21: Zalaris own implementation of Next Generation Human Capital Management
Appendix Zalaris own implementation of Next Generation Human Capital Management is an example what we can do for customers SuccessFactors Employee Central • Fully integrated solution combining the power of SuccessFactors Employee Central and Zalaris Payroll, Time and Travel – powered by SAP • Big ba
Slide 22: Sustainable business model
Appendix Sustainable business model 1 2 3 Diversified business model with Attractive and growing market Regional HRO leader blue-chip client base proven to be resilient over time Uniquely positioned towards multinational Zalaris is present in 12 countries and Significant growth expected in markets c
Slide 23: Diversified business model with blue-chip client base
1 Appendix Diversified business model with blue-chip client base Diversified blue-chip client base… …relying on Zalaris’ local knowledge and presence Diversified across industries and sectors Zalaris is present in 12 countries and offers expertise in Health Retail local laws and regulations in the l
Slide 24: Attractive and growing market proven to be resilient over time
2 Appendix Attractive and growing market proven to be resilient over time Strong underlying European market growth expected Key market trend MPHRO1) Market MCPO2) Market BPaaS3) Market (2017) Demand for cloud based platforms 7-8% 19- 75-80% and services 7% 18-21% 65- 21% 20% 60- 70% 65% SuccessFacto
Slide 25: Everest estimates Zalaris to have approximately 9% of HRO deals in Europe
Appendix 2 Everest estimates Zalaris to have approximately 9% of the number of HRO deals in the European Multi-process HR market • Multi-process human resources outsourcing (MPHRO) market growth 6- 7% • Zalaris with a strong footprint in North and MPHRO market share Europe Central Europe with 9 % sh
Slide 26: Regional HRO leader
3 Regional HRO leader Uniquely positioned towards multinational companies… …with a sustainable competitive advantage Local language and culture knowledge Large through presence with business support Global centers in all end-user markets Companies Offering of one technology platform that works effic
Slide 27: Analysts as Nelson Hall positions Zalaris as a Leader in Cloud based HR Services
3 Appendix Analysts as Nelson Hall positions Zalaris as a Leader in Cloud based HR Services “As organizations adopt cloud HR technology, HR BPaaS capabilities necessarily become increasingly important along with corresponding cloud services. Zalaris has established itself as a leader for HR BPaaS se
Slide 28: High degree of recurring and contracted revenues
4 Appendix High degree of recurring and contracted revenues… Recurring revenues with low churn Long agreements - Low churn • “Sticky” service – substantial 100 % 5% 5% 6% costs related to change of 12% 90 % 19% 18% 18% vendor 1.5 – 3% 80 % • Maximum churn in any year to average churn 70 % date is 5%
Slide 29: …with substantial upsell potential for additional services
5 Appendix …with substantial upsell potential for additional services and across geographies I Clearly identified upsell potential of high margin additional services to 50% of annual contract value in the current client base Core offering Upselling potential Employee Pension & Travel & Time & Sick H
Slide 30: 19 years of uninterrupted growth – to be continued
6 Appendix 19 years of uninterrupted growth – to be continued renewed BPO in UK extends Selected major contracts won Revenues (NOKm) Significant events Finnish service Established operations to Listed on Oslo Acquired Successful launch Founded by center near-shore in Latvia and Stock Enters Poland,
Slide 31: Highly experienced management team
7 Appendix Highly experienced management team… Management team Competence and experience Prior to his founding of Zalaris, Hans-Petter was a partner with Accenture, where he was responsible for business development in the company’s Nordic Hans-Petter Mellerud Outsourcing Unit. His educational backgr
Slide 32: …and committed owners and Board of Directors
7 …and committed owners and Board of Directors TOP 20 Shareholders as of 24.01.2020 Board members Lars Henriksen (DK) Chairman of the Board Liselotte Hägertz Engstam (SE) Jan Koivurinta (FI) Adele Bugge Norman Pran (NO) Jon Erik Haug (NO) Kenth Eriksson (SE) Corinna Schaefer (DE) © Zalaris 2020 Page
Slide 33: Disclaimer
Disclaimer This Presentation includes certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements relate to future circumstances and results and other statements that are not histor
Slide 34: Thank you!
Thank you! Gunnar.Manum@zalaris.com Zalaris ASA Hans-Petter.Mellerud@zalaris.com +47 4000 3300 www.zalaris.com – Value people