Slide 1: Interim report Q3 2019
– Value people Interim report | Q3 2019 2019
Slide 2: Presenter and agenda
Presenter and agenda 1. Highlights 2. Financial performance in Q3-19 3. Market update and conclusion Hans-Petter Mellerud CEO and Founder © zalaris 2019 Page 2
Slide 3: Margin improvements according to plan
Highlights | Strategy and operations Margin improvements according to plan 1 Vision 2020 ▪ Program aiming for reduction of personnel costs and strengthening market-facing capacities EBIT- ▪ Numerous initiatives implemented as planned for in order to consolidate functions, reduce physical program loc
Slide 4: Encouraging renewals & new sales - Robust pipeline
Highlights | Strategy and operations Encouraging renewals & new sales - Robust pipeline ▪ Revenues of 190.7 and Adjusted EBIT of 5.8 ▪ Adjusted EBITdA of MNOK 19.4 ▪ Long-term contracts renewed at good levels, onboarding of new customers ▪ Emphasis on expanding pipeline with focus on organic growth
Slide 5: Improved financial performance Y-o-Y
Highlights | Financial Improved financial performance Y-o-Y KEY FIGURES ▪ Revenues of 190.7 million, up 8.2% y-o-y NOK million Q3-19 Q3-18 Revenues 190.7 176.2 ▪ Adjusted EBIT of NOK 5.8 million, up from EBIT 4.8 (5.5) NOK -5.5 million in Q3-19 Adjusted EBIT1 5.8 (5.5) ▪ Improvement driven by stabil
Slide 6: Revenue trending upwards Y-o-Y with growth rate of ~8%
Highlights | Financial Revenue trending upwards Y-o-Y with growth rate of ~8% Revenues geographical distribution1 Area Comments 194 192 188 191 200 176 ▪ Revenue growth of 7.4% Y-o-Y 150 ▪ Driven by new sales in managed 116 108 113 106 99 services Northern 100 ▪ Secured agreements for expanding Euro
Slide 7: Agenda
7 Agenda • Key financials - Group • Key financials - Business segments • Update on EBIT improvement program & concluding remarks
Slide 8: Quarterly revenues with healthy growth in seasonally weak quarter
Group revenues Quarterly revenues with healthy growth in seasonally weak quarter Comments Revenues1 ▪ Managed Services in Northern Europe is the main driver of revenue increase with signing of several large new contracts +8.2% 194.1 192.3 190.7 187.5 ▪ In Central Europe large new clients within 176.
Slide 9: Group EBIT and Adjusted EBIT of NOK 4.8 and 5.8 million
Group EBIT Group EBIT and Adjusted EBIT of NOK 4.8 and 5.8 million Comments EBIT adjusted1 ▪ Increased profitability y-o-y despite the seasonality effect on business cycle ▪ Cost saving initiatives are implemented in +11.3 all regions with some lagging effect on the 10.0 profits ▪ E.g. UK & Ireland
Slide 10: Operating cash flow development is healthy
Group cash flow & restatement Operating cash flow development is healthy Comments Cash Flow IFRS reporting (NOK millions) ▪ Comments made on Adjusted cash flow: 2.9 -6.4 64.8 59.6 8.8 -0.2 ▪ Adjusting for e.g. outlays towards cash interest & investments in customer projects ▪ Operating Cash flow for
Slide 11: Agenda
Agenda • Key financials - Group • Key financials - Business segments • Update on EBIT improvement program & concluding remarks
Slide 12: Strong Y-o-Y revenue performance in both segments
Revenues by segment Strong Y-o-Y revenue performance in both segments Managed Services Professional Services ▪ Increased activity in the Nordics and new customer contracts with Aker BP, DNB, Aker Energy ▪ Contracts signed in Germany in Q3 will secure revenue of EUR 1 million. ▪ Germany: New sales an
Slide 13: EBIT-improvement driven by new sales & Vision 2020 program
Adjusted EBIT by segment EBIT-improvement driven by new sales &Vision 2020 program Managed Services Professional Services ▪ Northern Europe: Growing share of new ▪ EBIT improvement in the Professional Services customers within HR Cloud space contributing has been mainly driven by improved utilizatio
Slide 14: Agenda
Agenda • Key financials - Group • Key financials - Business segments • Update on EBIT improvement program & concluding remarks
Slide 15: Vision 2020 - EBIT improvement program
Vision 2020 - EBIT improvement program - Several initiatives launched with full effect expected Q1-20 Area Comments EBIT- ▪ Targeting return to pre acquisition EBIT margin run rate of 10% going into 2020 program ▪ Reduce monthly costs by NOK 4.7 million compared to Q1 baseline ▪ Consolidated Lithuan
Slide 16: EBITdA as alternative performance measurement
Highlights | Financial EBITdA as alternative performance measurement ▪ EBITdA gives a better picture of 11.2 -12.0 the cash generating properties of Zalaris 18.4 0.0 ▪ EBITDA is adjusted for -3.7 movements on balance sheet 0.0 items pertaining to Customer -6.7 projects1 8.4 1.2 ▪ Cash flow from oper
Slide 17: Strong Y-o-Y revenue performance in both segments
Revenues by segment Strong Y-o-Y revenue performance in both segments Managed Services Professional Services Focus on existing customers Organize and Operate Professional Services as a ▪ Supporting customers with expanded functional and Global Business Unit geo scope of services ▪ Market place to pl
Slide 18: Summary
Summary Preparing to enter 2020 on a strengthened trajectory with renewed capacity, a more optimized cost structure and sharper overall focus on customer value, service and business growth Area Comments EBIT- ▪ On track with Vision2020 including an approximately 6% reduction in FTEs and 8% reduction
Slide 19: We open for questions
Ay ZALARIS We open for questions
Slide 20: Zalaris at a glance – Local presence with one global platform
European Payroll & HR Solutions that Value People Zalaris at a glance – Local presence with one global platform • Zalaris ASA is a leading provider of Payroll and Human Headquarter Capital Management Services delivered through SaaS and BPaaS models • Founded in 2000 • Supporting fully digital proces
Slide 21: 18 years of uninterrupted growth
18 years of uninterrupted growth 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q2’18 renewed BPO in UK Selected major contracts won extends Revenues (NOKm) 156 745 397 421 374 326 226 262 202 213 218 136 168 47 60 81 2 6 19 36 2000 2001 2002 2003 2004 2005
Slide 22: Digitizing Payroll and HCM Processes with the goal of Cost Reduction
Digitizing Payroll and HCM Processes with the goal of Cost Reduction and Improved Employee Experience Selected blue-chip clients ✓ Full-service outsourced payroll and personnel processes enabling clients to focus on strategic HR ✓ Enabler of cross-border organizations 20-30% average savings when out
Slide 23: Our goal is to support the needs of the HR Director
Our goal is to support the needs of the HR Director Comprehensive Outsourcing of HR, Payroll Professional Services and Travel Expenses (BPaaS) Zalaris is responsible for People Advisory all end-to-end transactional HR Managed payroll Services and travel expense (BPaaS) processes People Cloud includi
Slide 24: We are focusing on customers with complex needs
We are focusing on customers with complex needs • Customer: Large & Medium size organizations and Multi National Enterprises with moderate to complex Our ambition is to be the needs leading European Provider of • Customer Verticals: Bank & Insurance, Cloud Based Outsourcing and Technology, Retail, P
Slide 25: Zalaris HR & Payroll Service Offering
Zalaris HR & Payroll Service Offering Zalaris is fully responsible for Zalaris is fully responsible for Zalaris simplify your Zalaris offer a complete suite end-to-end transactional HR all aspects of payroll and operations. With this model, of HR and payroll solutions processes including master- tra
Slide 26: Zalaris Strategy: Playing to Win
Zalaris Strategy: Playing to Win Our focus for now is serving European Organizations What is our winning aspiration? The leading European Where will Provider of Outsourcing and we play? Consulting Services that maximize the Value of Human How will we win? Capital through efficient Digital processes
Slide 27: We are focusing on customers with complex needs
Zalaris Strategy: Playing to Win We are focusing on customers with complex needs What is our winning • Customer: Large & Medium size aspiration? organizations and Multi National Enterprises with moderate to complex needs Where will we play? • Customer Verticals: Bank & Insurance, Technology, Retail,
Slide 28: Our Mobile first strategy is key in supporting end2end digitization
Our Mobile first strategy is continuing to be key in supporting end2end digitization of processes • Focus on simplifying day to day scenarios • New functionality for Total Compensation and Help desk will be added • Common user interface and experience across mobile and SuccessFactors © zalaris 2019
Slide 29: Everest estimates Zalaris to have approximately 9% of HRO deals
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 % share of the
Slide 30: We are part of fast growing markets
We are part of fast growing markets Global Market European Market Source: Everest Group © zalaris 2019 Page 30
Slide 31: NelsonHall positions Zalaris as a Leader in Cloud based HR Services
NelsonHall 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 services, especially in th
Slide 32: Everest cites Zalaris a Star Performer
Everest cites Zalaris a Star Performer in the Multi Process Outsourcing Provider Landscape © zalaris 2019 Page 32
Slide 33: Important notice
Important notice 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
Slide 34: Thank you!
Thank you! Hans-Petter Mellerud Zalaris ASA CEO +47 4000 3300 www.zalaris.com – Value people hans-petter.mellerud@zalaris.com +47 928 97 276