Zalaris Asa · OSL:ZAL
Zalaris Asa — Q2 2019 Earnings Presentation
24 slides from Zalaris Asa's earnings presentation, Aug 16, 2019
Slide 1: Interim report Q2 2019
– Value people Interim report | Q2 2019 16 August 2019
Slide 2: Presenter and agenda
Presenter and agenda 1. Highlights 2. Financial performance in Q2/19 3. Market update and conclusion Hans-Petter Mellerud Founder and CEO © zalaris 2019 Page 2
Slide 3: Profitability initiatives on track
Highlights | Strategy and operations Profitability initiatives on track • Revenues of NOK 187.5 million and EBIT of NOK 4.4 million or 2.4%. • High renewal activity and new customers demonstrates strong market position, solid pipeline for H2/19 • Strengthening sales & marketing to boost revenue grow
Slide 4: Stable revenue development in Q2
Highlights | Financial Stable revenue development in Q2 Key figures • Revenues of 187.5 million, down 0.7% y-o-y Q2 2019 NOK million Q2/19 Q2/18 • Adjusted EBIT of NOK 4.4 million, up from Revenues 187.5 188.8 NOK 1.5 million in Q2/18 Adjusted EBIT1 4.4 1.5 Profit for the period (3.3) (1.1) • Improv
Slide 5: Renewals confirm strong market position
Geographical revenue split Renewals confirm strong market position Northern Europe • Increase of 3.7% y-o-y to NOK 112.8 million Distribution of revenues • Driven by launch of new customers in by geography (in per cent) Managed Services and annual recognition of project revenue • Several renewals wi
Slide 6: Key financials
Key financials Second quarter 2019
Slide 7: Quarterly revenues
Group revenues Quarterly revenues Group revenues (in NOK million) • Revenues for Q2/19 amounted to 187.5 194 192 189 188 million, slightly down from Q2/18 176 • Renewals of key contracts with price reductions impact y-o-y growth rate • Ensures long term recurring revenue • Possibilities for increase
Slide 8: Group EBIT NOK 4.4 million
Group EBIT Group EBIT NOK 4.4 million Group EBIT (in NOK million) 10,0 6,5 ▪ Group EBIT for the quarter was NOK 4.4 million, compared to NOK 1.5 million in Q2/18. 4,4 0.8 % Profit margin 2.4 % ▪ Increased profitability y-o-y despite lower revenues, as 1,5 combined business post-acquisitions stabiliz
Slide 9: Ongoing investments impact cash flow
Financial position Ongoing investments impact cash flow Cash and cash flows Q2/19 Changes in balance sheet and cash flows (in NOK million) 100 ▪ Increase in total assets by NOK 96.4 million y-o-y to NOK 724.8 million at 30 June 2019, mainly due to Q3/18 refinancing 80 5,0 69,3 ▪ Equity decreased by
Slide 10: Key financials | Business segment
Key financials | Business segment Second quarter 2019 Segment reporting includes only external revenues and external profit
Slide 11: Varying performance across segments
Revenues by segment Varying performance across segments Managed Services Professional Services (NOK million) (NOK million) ▪ Revenues in Q2/19 amounted to NOK ▪ Decreased by NOK 5.6 million y-o-y to 139.4 million, a y-o-y growth of 3.2 %. NOK 48.2 million in Q2/19 ▪ Growth reflects increased number
Slide 12: Increased utilization drives EBIT-improvement
Adjusted EBIT by segment Increased utilization drives EBIT-improvement Managed Services Professional Services (NOK million) (NOK million) ▪ EBIT of NOK 17.9 million in Q2/19 in ▪ The EBIT was NOK 3.0 million, up line with same quarter last year from negative NOK 0.1 million in the ▪ Positive nominal
Slide 13: Update on EBIT improvement program and concluding remarks
Update on EBIT improvement program and concluding remarks
Slide 14: EBIT improvement program starting to show results
Road to higher margins EBIT improvement program starting to show results • EBIT-improvement program launched in Q1 presentation • Targeting return to pre-acquisition EBIT-margin run rate of 10% going into 2020 • Reduce monthly costs by NOK 4.7 million compared to Q1 baseline • Key sources of improve
Slide 15: Five key focus areas for improvement initiatives
Analyzing 1H performance visualizes five key focus areas for improvement initiatives and potential for scaling our business Variable Fixed/semi fixed © zalaris 2019 Page 15
Slide 16: Improve and stabilize Managed Services operating margins
Analyzing 1H performance visualizes five key focus areas for improvement initiatives and potential for scaling our business 1) Improve and stabilize overall Managed Services Operating Margins • Operate Managed Services as a global organization • Consolidate service centers to strategic locations • E
Slide 17: Improve CEE Managed Services margins
Analyzing 1H performance visualizes five key focus areas for improvement initiatives and potential for scaling our business 2) Improve CEE - Managed Services to deliver margins in line with the NE business • Consolidate German BPO and AMO services to Leipzig • Consolidate two SAP hosting centers to
Slide 18: Reduce CEE regional and country overhead
Analyzing 1H performance visualizes five key focus areas for improvement initiatives and potential for scaling our business 3) Reduce CEE Regional and Country Overhead • Move Finance and Accounting functions to Group Shared Service functions and rightsize local Controlling team • Consolidate 6 legal
Slide 19: Increase revenue in CEE Professional Services
Analyzing 1H performance visualizes five key focus areas for improvement initiatives and potential for scaling our business 4) Increase revenue in the CEE Professional Services • Operate Professional Services as global business unit maximizing available capacity • Strengthen recruiting effort and bu
Slide 20: Reduce Group overhead
Analyzing 1H performance visualizes five key focus areas for improvement initiatives and potential for scaling our business 5) Reduce Group Overhead • Consolidate group functions to head office and near/offshore locations • Reduce external costs through clean-up and renegotiation with supplier pool
Slide 21: On track for profitability improvement and continued growth
Concluding remarks On track for profitability improvement and continued growth • The key priority for Zalaris in 2019 remains to return to margin-levels from before the 2017-acquisitions. • On track with cost-cutting initiatives to reach consistent 10% adjusted EBIT going into 2020 • Increasing sale
Slide 22: 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 23: We open for questions
Ay ZALARIS We open for questions
Slide 24: 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