Presentation of interim financial results | Q2 2020
18th of August 2020
Agenda
- Highlights
- Financial Review
- Markets and Outlook
- Q&A
Hans-Petter Mellerud | Gunnar Manum |
Founder and CEO | CFO |
© zalaris 2020 | Page 2 |
Highlights | Q2 Presentation 2020 |
Second quarter 2020: Continued EBIT improvement
- Strong positive development in EBIT and Cash Flow
- Signed several new agreements and expansions despite Covid-19 resulted in a slow-down in closing new contracts during the quarter.
- Proactively and successfully servicing our customers in a challenging Covid-19environment.
- Based on the current financial performance of the Company the Board will propose a dividend of minimum NOK 0.5 per share for 2020
© zalaris 2020 | Page 3 |
HighlightsQ2 Presentation 2020
Positive margin development resulting from improvement efforts during the quarter
Revenue | ||||||||
NOK 198m (+6%) | ||||||||
198.4 | ||||||||
188.8 | 187.5 | |||||||
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 |
-18 | -18 | -18 | -19 | -19 | -19 | -19 | -20 | -20 |
Adj. EBIT
NOK 12.7m (+72%) | ||||||||
12.7 | ||||||||
7.4 | ||||||||
4.1 | ||||||||
-2.8 | ||||||||
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 |
-18 | -18 | -18 | -19 | -19 | -19 | -19 | -20 | -20 |
Adj. EBIT margin
6.4% | ||||||||
6,4% | ||||||||
3,9% | ||||||||
2,2% | ||||||||
-1.4% | ||||||||
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 |
-18 | -18 | -18 | -19 | -19 | -19 | -19 | -20 | -20 |
#FTEs | ||||||||
723 (-12.4%) | ||||||||
792 | 825 | |||||||
723 | ||||||||
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 |
-18 | -18 | -18 | -19 | -19 | -19 | -19 | -20 | -20 |
© zalaris 2020 |
Page 4
Highlights | Q2 Presentation 2020 |
European Payroll & HR Solutions that Value People
Zalaris - Local presence with one global platform
- Zalaris is a leading European provider of Payroll and Human Capital Management Services delivered through Software as a Service, Business Process as a Service, or Consulting delivery models
- Supporting fully digital processes for Payroll and Human Capital Management targeting 20-30% cost savings
- One common multi-country solution satisfying GDPR requirements combined with competent resources serving complex customers from with local competence and language
2019 Revenue: | > 300,000 | |||||
EUR 78 | 800 | |||||
employees served monthly | ||||||
million | Zalaris employees | |||||
through payroll services | ||||||
19 | Local service centers in | > 1,500,000 | ||||
12 | ||||||
years of experience and | ||||||
countries with top-notch | employees served monthly | |||||
continuous growth | ||||||
expertise in local laws and | across all HR solutions | |||||
regulations | ||||||
Headquarter
Managed Services
Professional Services
© zalaris 2020 | Page 5 |
Highlights | Q2 Presentation 2020 |
Diversified customer base with Germany as largest country
Diversified across industries and sectors
Health | ||
Not for profit | Industry | Retail |
organizations | ||
and Public | Bank & | |
sector | ||
Insurance | ||
Services | Products & |
Industrials | |
IT & | Offshore & |
Technology Infrastructure & | Energy |
Transportation |
Revenue per country Q2 2020 (NOKm)
UK Other | ||||
Poland | 9,0 | |||
12,5 | 5,6 | Germany | ||
Finland | ||||
63,9 | ||||
13,2 |
Denmark 15,9
25,9
Sweden
52,5 Norway
© zalaris 2020 | Page 6 |
Highlights | Q2 Presentation 2020 |
Signed several new agreements and expansions
- Covid-19resulted in a slow- down in closing new contracts during the quarter
- Pipeline remains strong and Covid-19 is expected to give a positive effect going forward
- Positive results from new Oracle Payroll partnership
New 10 years Master Services Agreement with leading Nordic Bank with 19'000+ employees for payroll and HR Services
Numerous expansions of agreements with existing UK customers for Business Continuity Services
New contract for implementation of SuccessFactors for Stadwerke Krefeld in Germany
New contract for the implementation of Payroll for Trøndelag County Municipality's 5000+ employees in Norway in partnership with Oracle
© zalaris 2020 | Page 7 |
HighlightsQ2 Presentation 2020
Maintained stable recurring revenue in Managed Services
Revenue | ||||||||
NOK 137.1m (+2.4%) | ||||||||
135.1 | 133.9 | 137.1 | ||||||
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 |
-18 | -18 | -18 | -19 | -19 | -19 | -19 | -20 | -20 |
© zalaris 2020 |
EBIT | ||||||||
NOK 16.0m (+1.3%) | ||||||||
17.3 | ||||||||
15.8 | 16.0 | |||||||
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 |
-18 | -18 | -18 | -19 | -19 | -19 | -19 | -20 | -20 |
Page 8
▪Revenue approx. in line with Q2 last year. Some reductions due to reduced volume of travel expense processing.
▪Zero churn and 90%+ recurring revenue
▪Management focus on executing on defined Business Continuity Plan to secure customer deliveries
- Realized additional approx. NOK 1 mill monthly cost savings from Q4 through streamlining of organization
Highlights | Q2 Presentation 2020 |
Grew Professional Services revenue and margin developed positively
Revenue | ||||||||
NOK 61.3m (+14.2%) | ||||||||
61.3 | ||||||||
53.8 | 53.7 | |||||||
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 |
-18 | -18 | -18 | -19 | -19 | -19 | -19 | -20 | -20 |
EBIT
NOK 6.1m* (+74.3%)
6.1 | ||||||||
3.5 | ||||||||
-0.1 | ||||||||
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 |
-18 | -18 | -18 | -19 | -19 | -19 | -19 | -20 | -20 |
- Strong revenue growth to new and existing customers in Poland and UK&I
- Reducing management layer in German organization increased agility
- Operational efficiency and capacity adjustments start to show effects
- Approx. 80% of Q2 revenue was with customers that were also customers 12 months prior
*Adjusted for one-off redundancy provision of NOK 2.0m
© zalaris 2020 | Page 9 |
HighlightsQ2 Presentation 2020
More than 60% of Professional Services revenue is recurring and supports a continuous presence with customers
Distribution of Projects vs
long term AMS based revenue
45% | 33% | 38% | |||
Projects | 49% | 46% | |||
App. Maint. Services 51% | 54% | 55% | 67% | 62% |
Q2-19 | Q3-19 | Q4-19 | Q1-20 | Q2-20 |
- 60%+ of Professional Services revenue is recurring and based on long term agreements and relationships
- Proves valuable in Covid-19 times to protect utilization of consultants
- Covid-19infused uncertainty drives customers buying behavior toward smaller projects with defined payback with known suppliers*
*) Gartner Group research
© zalaris 2020 | Page 10 |
Agenda
- Highlights
- Financial Review
- Markets and Outlook
- Q&A
Hans-Petter Mellerud | Gunnar Manum |
Founder and CEO | CFO |
© zalaris 2020 | Page 11 |
Financial Review | Q2 Presentation 2020 |
Revenue growth of 6% y-o-y
Revenue | ||||||||
NOK 198m (+6%) | ||||||||
198.4 | ||||||||
188.8 | 187.5 | |||||||
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 |
-18 | -18 | -18 | -19 | -19 | -19 | -19 | -20 | -20 |
Adj. EBIT
NOK 12.7m (+72%) | ||||||||
12.7 | ||||||||
7.4 | ||||||||
4.1 | ||||||||
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 |
-18 | -18 | -18 | -19 | -19 | -19 | -19 | -20 | -20 |
Adj. EBIT margin | |||||||||
6.4% | |||||||||
• Revenue for the quarter approx. in line with Q2 | |||||||||
6,4% | last year when adjusted for positive one-off | ||||||||
revenue effects last year and currency | |||||||||
movements | |||||||||
• Stable recurring revenue within Managed | |||||||||
Services and good revenue generation from | |||||||||
existing customers within Professional Services | |||||||||
3,9% | • Covid-19 resulted in a slow-down in closing | ||||||||
contracts with new customers during the quarter | |||||||||
2,2% | • Adj. EBIT increased by 71.6% compared to last | ||||||||
year | |||||||||
• Efficiency improvements and cost reduction | |||||||||
initiatives gradually impacting EBIT margin | |||||||||
positively | |||||||||
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | • Underlying cost base reduced by ~NOK 27m (- |
-18 | -18 | -18 | -19 | -19 | -19 | -19 | -20 | -20 | |
9%) year-to-date 2020 compared to last year | |||||||||
© zalaris 2020 |
Page 12
Financial Review
EBIT margins gradually improving
Q2 Presentation 2020
Adj. EBIT (NOKm) and margin (%), quarterly
6,7% | 6,4% | |||
4,6% | ||||
3,9% | ||||
13,4 | 12,7 | |||
2,4% | ||||
7,4 | 8,9 | |||
5,0 | ||||
Q2-19 | Q3-19 | Q4-19 | Q1-20 | Q2-20 |
Adj. EBIT (NOKm) and margin (%), LTM
5,0% | 5,0% | |||
4,4% | ||||
3,9% | ||||
3,5% | ||||
38,2 | 39,9 | |||
34,6 | ||||
30,5 | ||||
26,6 | ||||
Q2-19 | Q3-19 | Q4-19 | Q1-20 | Q2-20 |
- Adj. EBIT increased by 71.6% compared to last year
- Adj. EBIT LTM has increased by 50.0% compared to last year
- Efficiency improvements and cost reduction initiatives gradually impacting EBIT margin positively
- Underlying cost base reduced by ~NOK 27m (-9%)year-to-date 2020 compared to last year
© zalaris 2020 | Page 13 |
Financial Review
Condensed Profit and Loss
Q2 Presentation 2020
(NOK 1 000)
Revenue License costs Personnel expenses Other operating expenses Amortization implementation costs customer projects Depreciation, amortization and impairments EBIT Adjustment items Adjusted EBIT* Adjusted EBIT margin
Net financial income/(expense)
Profit/(loss) before tax
Income tax expense
Profit/(loss) for the period
Basic earnings per share (NOK)
2020 | 2019 | 2020 | 2019 | 2019 |
Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec |
198 445 | 187 548 | 399 056 | 379 899 | 776 792 |
16 237 | 13 904 | 33 235 | 28 832 | 67 981 |
113 131 | 106 911 | 224 710 | 214 480 | 438 543 |
39 759 | 40 381 | 80 940 | 82 416 | 166 887 |
8 939 | 8 714 | 17 541 | 17 011 | 36 606 |
13 012 | 13 226 | 25 811 | 26 265 | 52 684 |
7 367 | 4 412 | 16 818 | 10 895 | 14 091 |
5 323 | 2 965 | 9 263 | 5 534 | 16 149 |
12 690 | 7 377 | 26 081 | 16 429 | 30 240 |
6,4 % | 3,9 % | 6,5 % | 4,3 % | 3,9 % |
19 785 | (8 710) | (52 211) | (7 572) | (24 051) |
27 152 | (4 298) | (35 393) | 3 323 | (9 960) |
(4 733) | 974 | 9 261 | (383) | 2 950 |
22 420 | (3 324) | (26 132) | 2 940 | (7 010) |
1,14 | (0,17) | (1,33) | 0,15 | (0,36) |
- Significant improvement in adj. EBIT margin (%) compared to last year - 6.4% vs. 3.9%
- EBIT improvement program has resulted in a ~10% lower cost base (NOK 15.2m) YoY, however this has been offset by less costs being capitalised to customer projects and currency movements
- Unrealised currency gain of NOK 25.6m, relating the EUR 35m bond loan and other foreign currency denominated items
- Items excluded from adjusted EBIT Q2 2020: restructuring costs (NOK 2.0m), share-based payments (NOK 0.5m) and amortization of excess values on acquisitions (NOK 2.8m). (see definition of adj. EBITDA under APMs in Q2 2020 Report)
© zalaris 2020 | Page 14 |
Financial Review | Q2 Presentation 2020 |
Significant positive cash flow during the quarter
NOK million
-3,6 | 129,0 |
-4,1 | 3,8 |
45,4 | +41,5 |
87,5 |
Cash Q1 2020 | Cash flow | Capex | Lease payments | Other | Cash Q2 2020 |
operating activities |
- Cash balance increased by NOK 41.5m during the quarter
-
Cash balance at 30 June 2020 is
NOK 69.4m higher than last year
(Q2'19: NOK 59.6m) - Operating cash flow for the quarter of NOK 45.4m, includes a reduction in trade receivables of NOK 23.8m and deferred VAT payments (Covid-19relief) of NOK 8 - 10m
© zalaris 2020 | Page 15 |
Financial Review
Condensed Balance Sheet
(NOK 1 000)
Fixed and intangible assets
Trade accounts receivable
Customer projects assets
Cash and cash equivalents
Other assets
Total assets
Equity
Interest-bearing loans and borrowings
Lease liabilities
Customer projects liabilities
Other liabilities
Total equity and liabilities
2020 | 2019 | 2019 |
30. Jun | 30. Jun | 31.Dec |
360 477 | 364 051 | 354 184 |
138 118 | 162 531 | 148 614 |
84 763 | 99 665 | 88 808 |
128 953 | 59 570 | 82 448 |
38 119 | 38 965 | 38 984 |
750 430 | 724 783 | 713 038 |
101 522 | 100 094 | 92 166 |
406 892 | 368 293 | 369 058 |
30 961 | 44 476 | 35 635 |
52 255 | 60 645 | 55 740 |
158 799 | 151 276 | 160 440 |
750 430 | 724 783 | 713 038 |
Q2 Presentation 2020
- Cash and cash equivalents of NOK 129.0 million, up by NOK 41.5 million from previous quarter
- Lease liabilities relate to right- of-use assets, and primarily rental contracts for premises (IFRS 16)
- Net interest-bearing debt of NOK 277.9 million, decreased by NOK 66.6 million from previous quarter
- Based on the current financial performance of the Company the Board will propose a dividend of minimum NOK 0.5 per share for 2020
© zalaris 2020 | Page 16 |
Agenda
- Highlights
- Financial Review
- Markets and Outlook
- Q&A
Hans-Petter Mellerud | Gunnar Manum |
Founder and CEO | CFO |
© zalaris 2020 | Page 17 |
Market and Outlook | Q2 Presentation 2020 |
A complete Payroll and HR partner to mid- and large size organizations
MANAGED SERVICES (MS)
PROFESSIONAL SERVICES (PS)
Comprehensive Outsourcing of HR, Payroll
and Travel Expenses (BPaaS)
Managed payroll Services and travel expense (BPaaS)
Zalaris is | ||
Payroll processing (BPaaS) | responsible for | |
end-to-end | ||
payroll | ||
processes, sick | ||
Zalaris runs | leave refunds | |
payroll and | and employee | |
Cloud (SaaS) | distributes output | help desk |
Zalaris is responsible for all end-to-end transactional HR processes including employee master data, payroll, travel and attendance, benefits processes and employee help desk
Customer interacts via Zalaris service management
SAP Cloud Services | |||
• | SuccessFactors | • | Fieldglass |
• | Employee Central | • | Concur |
• | Employee Central Payroll | • | Integration |
• | Analytics Cloud | ServicesImplementation |
Services Advisory | SAP HCM & Payroll | |
Application Maintenance Services (AMS) | ||
Analytics and Business Intelligence | ||
Zalaris provides | Customer has |
SaaS solution | own HR, payroll, |
with | accounting and |
comprehensive | support staff that |
Payroll and | handle all |
HCM | aspects of |
functionality | payroll and |
transactional HR |
Customer is | Customer is |
responsible for | |
responsible for | |
maintenance of | |
input and own | |
employee data | |
reporting | |
and HR | |
Integrations to global HR solutions as:
and focus on strategic HR. No retained staff performing transactional HR
Robotics - Intelligent Automation |
SAP S4/Hana - Back Office Automation |
Degree of Outsourcing - utilizing Zalaris BPaaS | |
Low | High |
Professional Services is responsible for the delivery of traditional consulting projects as well as outsourcing- and cloud implementation projects
© zalaris 2020 | *BPaaS - Business Process as a Service | Page 18 |
Attractive market opportunities
- Growing Market
Q2 Presentation 2020
- "The global human capital management market (HCM) market size stood at USD 15,04 Billion in
2018 and is projected to reach USD 30,55 Billion by 2026, exhibiting a CAGR of 9,4% during the forecast period" according to Fortune Insights - Everest Research projects the Multi Country Payroll market to grow with 18-21% per year
- "The global human capital management market (HCM) market size stood at USD 15,04 Billion in
- Recognized by customers and industry analyst as one of the leaders in Multi Process HR Outsourcing, Multi Country Payroll and Cloud based HR Transformation powered by SuccessFactors.
- Expected increased demand resulting from organizations implementing digital HR processes or looking to reduce costs driven from Covid-19
- Increasing M&A activity in the opening up for consolidation and non-organic growth
© zalaris 2020 | Page 19 |
Summary | Q2 Presentation 2020 |
We continue work on #BestingOurselves
- Continue improving margins towards our communicated 10% target through organizational simplification, increased productivity, automation and utilization of our near- and offshore assets
- Deliver our 20th year of uninterrupted growth through expanding relationships with existing customers, explore new verticals as the municipality market in Norway and focus on core products and services combined with improved efficiency of marketing and sales
- Grow Managed Services through scaling existing solutions into Central Europe, UKI and Ireland and benefit from expected increased demand as a result of the Covid-19
- Operate Professional Services as a global business unit and further develop the potential of our solid partnership with SAP
- Explore non-organic growth options
- Creating more Net Promoting Customers - and Employees
© zalaris 2020 | Page 20 |
Agenda
- Highlights
- Financials
- Markets and Outlook
- Q&A
Hans-Petter Mellerud | Gunnar Manum |
Founder and CEO | CFO |
© zalaris 2020 | Page 21 |
"We simplify HR and payroll administration, and empower you with useful information so that you can invest more in people.
Hans-Petter Mellerud, CEO & Founder
Thank you!
Gunnar.Manum@zalaris.com
Hans-Petter.Mellerud@zalaris.com
Zalaris ASA | +47 4000 3300 | www.zalaris.com
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Zalaris ASA published this content on 17 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 August 2020 09:55:02 UTC