Zalaris Asa · OSL:ZAL
Zalaris Asa — Q3 2018 Earnings Presentation
21 slides from Zalaris Asa's earnings presentation, Oct 25, 2018
Slide 1: Interim Report | Q3 2018
Interim Report | Q3 2018 25 October 2018
Slide 2: Presenters and agenda
Presenters and agenda 1. Highlights 2. Financial performance in Q3/18 3. Market trends 4. Outlook Hans-Petter Mellerud Founder and CEO © zalaris 2018 Page: 2
Slide 3: Gaining speed. Profitability below target.
Highlights | Strategy and operations Gaining speed. Profitability below target. ▪ Integration completed, teams now gearing up customer activities, business development and operational improvements ▪ Pipeline of new orders firming up. High activity on potential new customers ▪ Contract extensions wit
Slide 4: Growth in revenues. Margins significantly below target.
Highlights | Financial Growth in revenues. Margins significantly below target. Key figures ▪ Year-to-date growth of 54.1 %. Mainly due Jan-Sep to acquisition of Sumarum and ROC NOK million 2018 2017 ▪ Q3 marked by usual seasonality effects Revenues 551 384 Operating profit1 7.3 24.6 as Europe slows
Slide 5: Trend shift in the UK. Strong performance of Consulting in Germany.
Revenue split Trend shift in the UK. Strong performance of Consulting in Germany. Distribution of revenues ▪ Nordics & Baltics by geography (in per cent) • Revenues declined from 103 million in Q3/17 to 99 million in Q3/18 2 • Mainly due to phasing of income from 3 4 3 Cloud contract renewals 32 40
Slide 6: Key financials
Key financials Third quarter 2018
Slide 7: Y-o-Y revenues up 25 million to NOK 176 million
Group operating revenues Y-o-Y revenues up 25 million to NOK 176 million Operating revenues (in NOK million) ▪ Q3 the weakest quarter of the year driven by seasonality in the consulting business. 194 189 186 176 ▪ Revenues of NOK 176 million, an increase 151 of 17.1% compared to Q3/17 ▪ Negative tim
Slide 8: Disappointing Q3 profitability
Group operating profit Disappointing Q3 profitability Group operating profit/loss (in NOK million) ▪ Q3/18 operating loss for the group was 5.5 million, a negative 3.1 % margin 12,4 ▪ Significant decline in profitability impacted by 11,3 contract renewals, timing of cloud revenues, PPA amortization,
Slide 9: Successful Bond Issue of EUR 35 Million at favorable terms
Financial position Successful Bond Issue of EUR 35 Million at favorable terms Cash and cash flows Q3/18 Changes in balance sheet and cash flows (in NOK million) 120 1,4 ▪ Cash and cash equivalents were 62,9 108.6 million as of the end of Q3/18, up from 100 37.4 million as of the end of Q2/18. ▪ Cash
Slide 10: Key financials | Business segment
Key financials | Business segment Third quarter 2018 Segment reporting includes only external revenues and external profit
Slide 11: Growth in HR Outsourcing and Consulting. Cloud impacted by timing effects.
Revenues by segment Growth in HR Outsourcing and Consulting. Cloud impacted by timing effects. HR Outsourcing Consulting Cloud Services (NOK million) (NOK million) (NOK million) ▪ Q3/18 revenues up 17.5 % ▪ Revenues in the Consulting ▪ Non-organic growth related to the compared with the same quarter
Slide 12: Margins in Q3 impacted short term by timing of revenue and cost of contract renewals
Profit by business segment ex. group overhead Margins in Q3 impacted short term by timing of revenue and cost of contract renewals HR Outsourcing Consulting Cloud Services (NOK million) (NOK million) (NOK million) ▪ Operating profit in Q3/18 was ▪ Operating profit in Q3/18 was ▪ Operating profit in
Slide 13: Market update and concluding remarks
Market update and concluding remarks
Slide 14: Attractive and growing market
Attractive and growing market Zalaris is operating in a market with significant growth Strong underlying European market growth expected Key market trend MPHRO1 Market MCPO2 Market BPaaS3 Market (2017) USDbn Growth Increasing focus on the overall USDbn 1.65-1.75 1.25-1.35 65- 75-80% workplace experi
Slide 15: Regional HRO leader
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 Competitor centers in all end-user markets Companies Competitor Offering of one technology platf
Slide 16: 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) 156 719 397 421 374 326 226 262 202 213 218 136 168 47 60 81 2 6 19 36 2000 2001 2002 2003 2004 2005
Slide 17: High degree of recurring and contracted revenues
High degree of recurring and contracted revenues Recurring revenues with insignificant churn Contract backlog provides earnings visibility Recurring revenues - % of total revenues1 Northern Europe top 20 customer contracts 2 100% 100% 5% 5% 6% 12% 90% 19% 90% 80% 80% 70% 70% 60% 60% 50% 50% 95% 95%
Slide 18: Rebound ahead after disappointing profits in Q3
Concluding remarks Rebound ahead after disappointing profits in Q3 ▪ With integration of new businesses successfully completed, we are now concentrating our efforts and energy on achieving target margins including realization of cost and revenue synergies ▪ New company-wide systems and procedures ar
Slide 19: 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 20: We open for questions
As 2ALARIS We open for questions
Slide 21: Thank you!
Zalaris ASA Thank you! PO Box 1053 NO-0218 Oslo Hans-Petter Nina Stemshaug Mellerud CEO & Founder CFO +47 4000 3300 hans-petter.mellerud@zalaris.com nina.stemshaug@zalaris.com www.zalaris.com