Investor Presentation • Oct 26, 2023
Investor Presentation
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| Q3 2023 |
|
|---|---|
| One-stop HR platform |
| Q3 HIGHLIGHTS 3 | |
|---|---|
| KEY FIGURES 4 | |
| CEO INSIGHTS 5 | |
| ALTERNATIVE PERFORMANCE MEASURES (APMS)23 | |
| KEY FIGURES 26 |
Zalaris is a leading European provider of human capital management (HCM) and payroll solutions, covering the entire employee lifecycle from recruitment and onboarding to compensation, time and attendance, travel expenses and performance management.
We offer flexible delivery models, including on-premise, software as a service (SaaS), cloud integration and business process outsourcing (BPO). We also have experienced consultants and advisors who can support any industry and IT environment.
Based in Oslo, Norway, and listed on the Oslo Stock Exchange (ZAL), we serve over one million employees every month across various industries and with some of Europe's most reputable employers. We have grown steadily since our inception in 2000 and today operate in the Nordics, Baltics, Poland, Germany, Austria, Switzerland, Hungary, France, Spain, India, Ireland, the UK, Singapore and Australia.
*Defined in separate section: Alternative Performance Measure (APMs)
| 2023 | 2022 | 2023 | 2022 | 2022 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Revenue | |||||
| Managed Services | 200 005 | 160 628 | 590 705 | 458 842 | 644 801 |
| Professional Services | 73 076 | 61 349 | 215 828 | 181 192 | 243 138 |
| New business (APAC) | 4 379 | 1 587 | 12 256 | 2 157 | 4 803 |
| Total revenue | 277 459 | 223 564 | 818 788 | 642 191 | 892 742 |
| Adjusted EBIT1) | |||||
| Managed Services | 29 330 | 17 531 | 83 830 | 46 119 | 69 734 |
| Professional Services | 7 002 | 4 226 | 20 664 | 16 396 | 21 172 |
| HQ (unallocated costs) | (10 689) (10 311) | (35 518) | (26 513) | (38 525) | |
| Adj. EBIT (ex. APAC) | 25 643 | 11 446 | 68 975 | 36 001 | 52 381 |
| Adj. EBIT margin (ex. APAC) | 9,4 % | 5,2 % | 8,6 % | 5,6 % | 5,9 % |
| New business (APAC) | (1 978) | (1 696) | (6 607) | (5 049) | (6 139) |
| Adj. EBIT | 23 665 | 9 750 | 62 369 | 30 952 | 46 242 |
| EBIT margin (%) | 8,5 % | 4,4 % | 7,6 % | 4,8 % | 5,2 % |
| Share-based payments | (2 601) | (2 520) | (8 789) | (6 225) | (8 706) |
| Amortisation excess value on acquisitions | (3 426) | (2 873) | (10 196) | (8 822) | (11 935) |
| Other | - | - | - | (1 906) | (1 906) |
| EBIT | 17 638 | 4 356 | 43 383 | 13 999 | 23 695 |
| EBIT margin (%) | 6,4 % | 1,9 % | 5,3 % | 2,2 % | 2,7 % |
| 2023 | 2022 | 2023 | 2022 | 2022 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Revenue | 277 459 | 223 564 | 818 788 | 642 191 | 892 743 |
| Growth (YoY) | 24,1 % | 14,4 % | 27,5 % | 12,0 % | 15,1 % |
| Adjusted EBITDA1) | 37 926 | 22 041 | 102 145 | 68 626 | 98 261 |
| Adjusted EBITDA margin (as % of revenue) | 13,7 % | 9,9 % | 12,5 % | 10,7 % | 11,0 % |
| Adjusted EBIT1) | 23 665 | 9 749 | 62 368 | 30 951 | 46 242 |
| Adjusted EBIT margin (as % of revenue) | 8,5 % | 4,4 % | 7,6 % | 4,8 % | 5,2 % |
| EBIT | 17 638 | 4 356 | 43 383 | 13 998 | 23 695 |
| Profit/(loss) for the period | 13 371 | (11 100) | (23 842) | (26 622) | (38 721) |
| Earnings per share (EPS) | 0,62 | (0,95) | (1,10) | (1,23) | (1,79) |
| Total comprehensive income | (1 796) | (3 109) | 4 204 | (8 129) | (27 431) |
| Net cash flow from operarting activities | 15 265 | (10 615) | 14 428 | (12 001) | 422 |
| Net interest-bearing debt (NIBD)1) | 333 327 | 284 465 | 333 327 | 284 465 | 287 133 |
| Adjusted EBITDA (LTM) / NIBD | 2,5 | 3,0 | 2,5 | 3,0 | 2,9 |
1) Defined in separate section Alternative Performance Measure (APMs)
In Q3 2023, Zalaris delivered another quarter with good growth taking revenues to NOK 277.5 million, up from NOK 223.6 million in the same quarter last year. This translates to year-on-year growth of 24.1% in actual terms and 13.4% in constant currency terms, which is well above our communicated target of 10%.
Adjusted EBIT (ex. Asia Pacific) increased to an alltime-high of NOK 25.6 million and increase of 125% from NOK 11.5 million in the same quarter last year. With an adjusted EBIT before APAC of 9.4% we continue to be well on the way to our 10% EBIT target.
Our sales team continued delivering on their targets closing around NOK 20 million of annual contract value of new agreements: delivering Zalaris PeopleHub-based payroll services to a large German pharma company with 4,000+ employees, expanding our agreement with one of our large Scandinavian customers to another country to serve their 10,000+ additional employees with a complete PeopleHub solution as SaaS, and renewing the agreement with one of our financial services customers for another five-year term and expanding with two countries adding an additional 500 employees.
In Germany, after the quarter end, we secured another four-year agreement with an annual contract value of more than two million euro with the state of North Rhine-Westphalia, for application maintenance of their payroll systems serving around 700,000 employees.
Our APAC team, building our presence from scratch over the last 18 months, continued their signing streak; they are now well on their way to deliver their target break-even in Q4.
Our EBIT-improvement program continued to have a positive impact during the quarter. As communicated in Q2, we have moved from a project phase to a continuous improvement phase in Northern Europe. We now focus all our efforts on moving our German operations to Zalaris 4.0, and expect to continue to see positive results from this, as well as from increased revenues from both new and renegotiated agreements over the next two quarters.
As communicated on our first capital markets day in September, our goal is to become the leading European provider of Global Payroll and HR solutions and services to mid-market and large customers.
Based on our reported market success, we experience that PeopleHub is a popular choice among medium and large customers who want to modernize their Payroll & HR processes. We have met a key milestone of becoming a EUR 100 million annualized revenue company. We are confident that we can sustain our 10% growth target for the next 36 months, by selling more global payroll deals based on PeopleHub. We plan to achieve this by growing our Managed Services revenue by 15% and our Professional Services revenue by 5% annually, reaching approximately EUR 150 million annualized revenue by Q4 2026.
We believe that we can meet our 10% EBIT target and improve the margin further to 12-15% by 2026 by continuing refining our Zalaris 4.0 operating model, increasing our productivity through automation at 10% per year, and leveraging our scalable model. Add to this an increased focus on capital allocation targeting an operating cash flow conversion before interest payments, of 65 - 70%. Based on a target EBIT of 12% in 2026, this should give an operating cash flow before interest of approximately 190 million, aligning us closer to our international peers.
A foundation for the success of Zalaris is our commitment to the use of information technology as the key element for HR and process transformation. In addition to the AI solutions that we have deployed for some time as chatbot solutions, cyber security monitoring and recently the introduction of Bing Chat Enterprise to our team members, we have established a strategic project to explore how we can use this new and exiting technology to improve existing services and add new ones to our portfolio.
Living our values of #aiminghigh, #teamwork and #bestingourselves we in #teamZalaris continue being enthusiastic of our future!
Hans-Petter Mellerud, CEO of Zalaris
Revenue for the third quarter 2023 amounted to NOK 277.5 million (Q3 2022: NOK 223.6 million). The revenue increase was +24.1%. Measured in constant currency the increase was +13.4%*.
The increase in revenue compared to last year is mainly from new customers within Managed Services, as well as increased volume of change orders and additional services from existing customers. The Net Retention within Managed Services was approximately 106%*, measured in constant currency.
During the third quarter, Zalaris signed a five-year agreement with a German pharmaceutical company to deliver a new outsourced payroll solution and outsourcing services to serve the company's more than 4,500 employees in Germany. The solution, which is scheduled to go-live in the first quarter 2024, is based on Zalaris PeopleHub integrated with SAP SuccessFactors as the company's global HR solution.
Zalaris has also signed a five-year agreement with an existing customer in the Nordics to cover an additional country serving approximately 10,000 employees. Zalaris will deliver a PeopleHub based Payroll and Time & Attendance Solution as Software as a Service (SaaS).
New contracts signed during the third quarter amount to annual recurring revenue ("ARR") of approx. NOK 19 million.
The revenue impact of signed contracts that have not yet gone live as of 30 September 2023 is shown in the table below. The table shows the ARR within Managed Services at the end of the third quarter, and how the Group's ARR will increase, when these contracts are implemented.
*See definitions and reconciliation of APM's in a separate section of the interim report.
The net ARR to be implemented from new contracts (NOK 99 million) represents a further increase in annual revenue for Managed Services of +12.4% (when compared to the total annualized revenue for Q3 2023).
The figure below shows the timing of the expected increase in the ARR for Managed Services, based on these new contracts.
Revenue in the Nordic & Baltic region was NOK 133.7 million in the third quarter. Adjusted for positive currency effects, the revenue was 5.5% higher than the figure last year of NOK 120.4 million. This was explained by the implementation of new customers, and additional volumes and change orders from existing customers, within Managed Services.
Revenue in the Central Europe region was NOK 115.8 million in the third quarter, compared to NOK 89.4 million last year. An increase of +13.3%, when adjusted for positive currency effects.
The organic growth came mainly from new customers in Managed Services in Germany.
Managed Services in Germany grew by +39.7% in local currency, compared to last year. Within Professional Services, Germany and Poland showed a revenue growth of -1.1% and -15.4% respectively in local currency compared to last year.
Revenue in the UK & Ireland region amounted to NOK 23.6 million in the third quarter, compared to NOK 12.1 million in the same quarter last year, an increase of +72.7% in local currency. This growth can be attributed to heightened activity in Managed Services, a strategic focus area in the region, which led to substantial rise in revenue with this segment. Additionally, revenue in Professional Services also increased significantly compared to last year, driven by a large multi-country payroll implementation project for Ryanair.
The adjusted EBIT, before EBIT from APAC region, was NOK 25.6 million for the third quarter (NOK 11.5 million). The increase is largely explained by increased revenue from new and existing customers, and margin improvements in the Nordic region. The focus on increased use of resources from near- and offshore locations, as well as other operational improvements, has had a positive effect on customer margins in the Nordic region.
The adjusted EBIT from APAC was negative NOK 2.0 million in the third quarter. The financial result from new business activities (e.g. the establishment of a new geographical region) are reported separately, until the business is up and running at a normal level and included in one of the two main segments.
EBIT for the quarter was NOK 17.6 million (NOK 4.4 million). The positive variance from last year is mainly due the factors noted above.
The difference between the adjusted EBIT and EBIT were the calculated costs of the Company's sharebased payment plan (NOK 2.6 million) and amortisation of excess values on acquisitions (NOK 3.4 million).
The Group had net financial income of NOK 1.1 million for the third quarter (net expense NOK 13.8 million). This includes a net unrealised currency gain of NOK 12.6 million (loss NOK 8.3 million) mainly relating to the EUR 40 million bond loan.
The net profit for the quarter was NOK 13.4 million (negative NOK 11.1 million), after a loss from discontinued operations (vyble GmbH) of NOK 2.2 million (loss NOK 4.4 million)
Total comprehensive income amounted to negative NOK 1.8 million (negative NOK 3.1 million), after currency translation differences of negative NOK 15.2 million (NOK 8.0 million) relating to foreign subsidiaries.
In the third quarter 2022, we announced our plans to increase our annual EBIT by NOK 40 – 50 million by the end of 2023. This come from direct cost improvements and improved allocation of resources of NOK 25 - 30 million, and contribution from new contracts of NOK 20 - 25 million. A significant part of this EBIT improvement has already materialized, and the EBIT has gradually increased during the last four quarters. Our goal is to reach an adjusted EBIT margin of 10% by the end of 2023, and the program is progressing according to plan.
We aim for each Zalaris entity to have an EBIT margin of at least 15 – 20%, before any allocation of group costs. Well performing countries have a high degree of standardization and customer deliveries based on the Zalaris PeopleHub platform, and use more resources from near- and offshore locations when delivering services. They also benefit from economies of scale, that improve profitability.
The EBIT improvement projects in Managed Services in the Nordic countries were mainly completed in the second quarter. We moved significant tasks from local to near-/offshore locations to reduce operational costs and increase existing capacity for more revenue without hiring new local resources. These projects have increased EBIT margins in these countries, and we expect more improvements as we stabilise the new organisation is being stabilised and realise more benefits.
Germany has much lower margins than other countries, because it has traditionally delivered services based on individual customer's specific system configurations and requirements. In addition, limited use of near- and offshore resources and automation has had a negative impact. In Professional Services, they have also had to rely on external consultants, due to a tight labour market. As part of the EBIT improvement program, we are changing the operating model in Managed Services from a local customer-oriented to a process-oriented delivery model, and work is being shifted to near- and offshore locations.
We have expanded our delivery team in Latvia with a German team, and the new setup also includes local experts in Germany who can comply with local laws. In addition, we have established a new delivery centre in Poland, to increase our flexibility and competence for the German market. These activities are progressing well and will improve margins gradually.
The Managed Services ("MS") segment had revenue of NOK 200.0 million (72% of total revenue) for the third quarter 2023, compared to NOK 160.6 million in the same quarter last year. This corresponds to an increase of 15.3%, when adjusted for positive currency effects, and was mainly due to revenue from new customers that have gone live since the third quarter last year and increased change orders and additional services from existing customers.
As noted earlier in this report, Zalaris is implementing a large number of new MS contracts. As a result, significant resources are being utilized on contract implementation, resulting in increased deferred revenue, which will be recognized as revenue from when the projects go live. MS revenue deferred for the third quarter was NOK 25.3 million, compared to NOK 12.8 million last year.
The adj. EBIT for MS for the third quarter was NOK 29.3 million (NOK 17.5 million), and adj. EBIT margin was 14.6% (10.9%). EBIT margin was positively impacted by the increased revenue.
The planned EBIT improvement of NOK 40 – 50 million by the end of 2023, described earlier in this report, mainly relates to Managed Services.
The target is for Managed Services to operate in the same manner across all regions. In this model Managed Services will be able to continue to optimise and harmonise the operational processes, use digitalisation, leverage the flexibility and competence of resources across all deliveries, both locally, nearshore (Latvia, Poland, Spain) and offshore (India).
Revenue in the Professional Services ("PS") segment amounted to NOK 73.1 million for the third quarter 2023, compared to NOK 61.3 million last year. When adjusted for positive currency movements the increase was approximately 4.1% year-on-year.
Significantly higher revenue in UK, was partly offset by lower revenue in Poland.
The adj. EBIT for PS for the third quarter was NOK 7.0 million (NOK 4.2 million). and adj. EBIT margin was 9.6% (6.9%).
During the first quarter last year, Zalaris established operations in Australia and Singapore, to expand its multi-country payroll capabilities to the Asia-Pacific region ("APAC"). The purpose is to better support European headquartered customers, that have operations in APAC countries. APAC is one of the fastest growing markets for multi-country payroll. The new region is offering both Professional Services and Managed Services. The new region is reported separately until it has reached a sustainable business level.
The new region is an early-stage business, and had revenue and adj. EBIT of NOK 4.4 million (NOK 1.6 million) and negative NOK 2.0 million (NOK 1.7 million) respectively in the third quarter.
In February 2022, Zalaris acquired the assets of vyble AG, a payroll and HR solution start-up located in Rostock and Hamburg, Germany. The business is being operated through a 90% owned subsidiary, vyble GmbH ("vyble"). vyble has a complete suite of Payroll and HR solutions delivered as Software as a Service (SaaS) targeting the SME market in Germany. There is an ongoing process to exit this investment, and a final solution is expected in the fourth quarter.
Zalaris had total assets of NOK 1,054.2 million as of 30 September 2023, compared to NOK 1,051.7 million on 30 June 2023.
Cash and cash equivalents were NOK 120.7 million (including cash in discontinued operations) as of 30 September 2023, an increase of NOK 7.2 million from the end of the previous quarter.
Total equity as of 30 September 2023 was NOK 177.6 million, compared to NOK 176.7 million as of 30 June 2023. This corresponds to an equity ratio of 16.8% (16.8%).
The Company holds 490,070 own shares at 30 September 2023.
Net interest-bearing debt (interest-bearing debt less cash and cash equivalents) was reduced from NOK 356.3 million on 30 June 2023 to NOK 333.3 million on 30 September 2023.
The decrease in net interest-bearing debt is due to the lower EUR/NOK currency rate, impacting the NOK value of the EUR denominated bond loan positively, and a positive net cash flow for the quarter.
Operating cash flow during the third quarter 2023 was NOK 15.3 million (negative NOK 10.6 million).
Net cash flow from investing activities for the third quarter was negative NOK 4.2 million (negative NOK 8.0 million), mainly relating to internal development of new and existing system solutions.
Net cash flow from financing activities for the third quarter was negative NOK 3.7 million (negative NOK 4.7 million).
There have been no events after the balance sheet date, which have had a material effect on the issued accounts.
Zalaris is well positioned for future revenue growth, having signed a record number of large new, longterm BPaaS/SaaS contracts within the Managed Services Division during the last 18 months. The pipeline of new potential contracts remains strong, supporting Zalaris' target of an annual growth rate of 10%.
The increased scale of our operations from this revenue growth will be a key driver for higher profitability, as well as further cost optimisation. Zalaris is executing on a detailed plan for EBIT improvements of NOK 40 – 50 million by the end of 2023. This projection is based on the annualised adjusted EBIT recorded in the third quarter of 2022. Key targets for 2023 include further automation of our delivery processes and improved use of our near- and offshore delivery centres in Latvia, Poland and India. These improvement initiatives have largely been completed in the Nordic region, and the focus is currently on the German operation.
These activities, and the significant revenue growth in Managed Services, may have a short-term negative impact on margins due to both on-boarding
of new customers and restructuring activities, until new employees are trained and can be fully utilised. However, Zalaris remains firm on its short-term target of an adjusted EBIT margin of 10%, and a long-term target of an adjusted EBIT margin of 12 – 15%.
Based on industry and market research reports, Zalaris' key markets, within multi-country payroll and HR outsourcing, are expected to continue growing in the foreseeable future. The company is well positioned to capture part of this growth through new customers, as demonstrated by the multi-country contracts with e.g., Yunex Traffic and Innomotics. Growth will also come from expanding the service offering to existing customers, particularly increasing geographic coverage, as we have done with customers such as Siemens and Tryg.
Zalaris has been expanding its geographical coverage both in Europe and the Asia-Pacific region to strengthen its competitive position. While the Company previously established its own subsidiaries in new countries, a revised expansion strategy is being implemented using in-country partners, who will use Zalaris' PeopleHub solution. This enables profitable geographic expansion globally, with low and moderately sized employee volumes. The global macro picture with high inflation, increased interest rates, and fear of recession, have so far not impacted our business significantly. However, we are experiencing upward pressure on salaries, and the recruitment of new employees is challenging in some markets. Most of our long-term contracts within the Managed Services Division have provisions for the annual indexation of salaries. Historically, we have seen an increased interest in the market for outsourcing in a recessionary environment. This is when companies traditionally are required to focus on operational efficiencies and cost reductions. The underlying fundamentals remain strong and Zalaris has a solid pipeline of potential new sales in all regions.
The Board of Directors of Zalaris ASA Oslo, 25 October 2023
| (NOK 1 000) | Notes | 2023 Jul-Sep |
2022 Jul-Sep |
2023 Jan-Sep |
2022 Jan-Sep |
2022 Jan-Dec |
|---|---|---|---|---|---|---|
| unaudited | unaudited | unaudited | unaudited | |||
| Revenue | 2 | 277 459 | 223 564 | 818 788 | 642 191 | 892 743 |
| Operating expenses | ||||||
| License costs | 23 482 | 20 704 | 73 348 | 61 120 | 80 198 | |
| Personnel expenses | 4 | 138 853 | 120 179 | 431 558 | 354 988 | 483 824 |
| Other operating expenses | 73 919 | 58 392 | 203 620 | 152 246 | 222 537 | |
| Depreciation and impairments | 975 | 672 | 2 839 | 2 489 | 3 908 | |
| Depreciation right-of-use assets | 5 880 | 4 768 | 16 906 | 13 343 | 18 535 | |
| Amortisation intangible assets | 7 753 | 7 177 | 23 284 | 21 201 | 28 409 | |
| Amortisation implementation costs customer projects | 3 | 8 959 | 7 316 | 23 850 | 22 807 | 31 638 |
| Total operating expenses | 259 821 | 219 208 | 775 406 | 628 193 | 869 049 | |
| Operating profit (EBIT) | 17 638 | 4 356 | 43 383 | 13 998 | 23 694 | |
| Financial items Financial income |
5 | 2 135 | 2 393 | 5 321 | 5 171 | 7 565 |
| Financial expense | 5 | (13 660) | (7 875) | (65 516) | (22 370) | (32 106) |
| Unrealized foreign exchange gain/(loss) | 5 | 12 638 | (8 294) | 1 554 | (17 685) | (15 561) |
| Net financial items | 1 113 | (13 776) | (58 642) | (34 884) | (40 102) | |
| Profit before tax from continuing operations | 18 751 | (9 420) | (15 259) | (20 886) | (16 408) | |
| Tax expense | (3 192) | 2 727 | (974) | 6 391 | (6 295) | |
| Profit for the period from continuing operations | 15 559 | (6 694) | (16 233) | (14 495) | (22 703) | |
| Profit/(loss) after tax for the year from discontinued operations |
9 | (2 188) | (4 406) | (7 609) | (12 127) | (16 018) |
| Profit for the period | 13 371 | (11 100) | (23 842) | (26 622) | (38 721) | |
| Profit attributable to: | ||||||
| - Owners of the parent | 13 590 | (10 625) | (23 081) | (25 409) | (37 119) | |
| - Non-controlling interests | (219) | (475) | (761) | (1 213) | (1 602) | |
| Earnings per share: | ||||||
| Basic earnings per share (NOK) | 0,62 | (0,95) | (1,10) | (1,23) | (1,79) | |
| Diluted earnings per share (NOK) | 0,62 | (0,95) | (1,10) | (1,23) | (1,79) | |
| Earnings per share for continuing operations: | ||||||
| Basic earnings per share (NOK) | 0,72 | (0,29) | (0,75) | (0,67) | (1,05) | |
| Diluted earnings per share (NOK) | 0,72 | (0,29) | (0,75) | (0,67) | (1,05) |
| 2023 | 2022 | 2023 | 2022 | 2022 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (NOK 1 000) | Notes | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec | ||||
| unaudited | unaudited | unaudited | unaudited | |||||||
| Profit for the period | 13 371 | (11 100) | (23 842) | (26 622) | (38 721) | |||||
| Other comprehensive income | ||||||||||
| Items that will be reclassified to profit and loss in subsequent periods | ||||||||||
| Currency translation differences | (15 167) | 7 991 | 28 046 | 18 493 | 11 290 | |||||
| Total other comprehensive income | (15 167) | 7 991 | 28 046 | 18 493 | 11 290 | |||||
| Total comprehensive income | (1 796) | (3 109) | 4 204 | (8 129) | (27 431) | |||||
| Total comprehensive income attributable to: | ||||||||||
| - Owners of the parent | (1 577) | (2 634) | 4 965 | (6 917) | (25 829) | |||||
| - Non-controlling interests | (219) | (475) | (761) | (1 213) | (1 602) |
| 2023 | 2022 | 2022 | ||
|---|---|---|---|---|
| (NOK 1 000) | Notes | 30. Sept | 30. Sept | 31. Dec |
| unaudited | unaudited | |||
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 111 908 | 121 110 | 119 141 | |
| Goodwill | 210 962 | 196 504 | 195 834 | |
| Total intangible assets | 322 870 | 317 613 | 314 975 | |
| Deferred tax asset | 30 163 | 27 087 | 29 837 | |
| Fixed assets | ||||
| Right-of-use assets | 51 045 | 52 914 | 48 363 | |
| Property, plant and equipment | 35 594 | 32 506 | 33 088 | |
| Total fixed assets | 86 639 | 85 420 | 81 451 | |
| Total non-current assets | 439 672 | 430 120 | 426 263 | |
| Current assets | ||||
| Trade accounts receivable | 241 011 | 178 080 | 191 715 | |
| Customer projects | 3 | 187 688 | 131 478 | 135 359 |
| Other short-term receivables | 54 695 | 52 381 | 48 225 | |
| Cash and cash equivalents | 6 | 120 728 | 94 843 | 91 796 |
| Total current assets | 604 123 | 456 782 | 467 095 | |
| Assets held for sale | 9 | 10 354 | 11 759 | 12 384 |
| TOTAL ASSETS | 1 054 150 | 898 661 | 905 742 | |
| 2023 | 2022 | 2022 | ||
|---|---|---|---|---|
| (NOK 1 000) | Notes | 30. Sept | 30. Sept | 31. Dec |
| unaudited | unaudited | |||
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Paid-in capital | ||||
| Share capital | 2 165 | 2 159 | 2 159 | |
| Other paid in equity | 18 695 | 9 003 | 10 039 | |
| Share premium | 143 045 | 160 616 | 141 898 | |
| Total paid-in capital | 163 904 | 171 778 | 154 096 | |
| Other equity | 14 519 | (2 253) | 14 519 | |
| Retained earnings | 1 503 | 9 479 | (3 417) | |
| Equity attributable to equity holders of the parent | 179 926 | 179 005 | 165 199 | |
| Non-controlling interest | -2 363 | 1 457 | (1 602) | |
| Total equity | 177 564 | 180 462 | 163 597 | |
| Liabilities | ||||
| Non-current liabilities | ||||
| Deferred tax | 22 615 | 25 300 | 23 899 | |
| Interest-bearing loans | 7 | 452 505 | 10 200 | 10 891 |
| Other long-term liabilities | - | 660 | 659 | |
| Lease liabilities | 33 189 | 35 750 | 32 328 | |
| Total long-term liabilities | 508 309 | 71 911 | 67 777 | |
| Current liabilities Trade accounts payable |
31 725 | 17 797 | 45 407 | |
| Customer projects liabilities | 3 | 161 363 | 98 302 | 103 744 |
| Interest-bearing loans | 7 | 1 573 | 369 851 | 369 693 |
| Lease liabilities | 19 899 | 18 844 | 17 783 | |
| Income tax payable | 4 862 | (24) | 3 270 | |
| Public duties payable | 40 412 | 39 403 | 37 686 | |
| Other short-term liabilities | 103 593 | 97 896 | 92 003 | |
| Total short-term liabilities | 363 427 | 642 069 | 669 586 | |
| Liabilities directly associated with the assets held for sale | 9 | 4 850 | 4 219 | 4 783 |
| Total liabilities | 876 587 | 718 199 | 742 146 | |
| TOTAL EQUITY AND LIABILITIES | 1 054 150 | 898 661 | 905 742 |
| 2023 | 2022 | 2023 | 2022 | 2022 | ||
|---|---|---|---|---|---|---|
| (NOK 1 000) | Notes | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| unaudited | unaudited | unaudited | unaudited | |||
| Cash Flow from operating activities | ||||||
| Profit (Loss) before tax from continued operation | 18 751 | (9 420) | (15 259) | (20 886) | (16 408) | |
| Profit (Loss) before tax from discontinued operation | (2 805) | (5 649) | (9 755) | (15 547) | (20 536) | |
| Net financial items | 5 | (1 113) | 13 776 | 58 642 | 34 883 | 40 103 |
| Share based program | 2 601 | 2 520 | 8 789 | 6 225 | 8 706 | |
| Depreciation and impairments | 975 | 671 | 2 839 | 2 488 | 3 907 | |
| Depreciation right-of-use assets | 5 880 | 4 768 | 16 906 | 13 343 | 18 535 | |
| Amortisation intangible assets | 7 753 | 7 177 | 23 284 | 21 200 | 28 409 | |
| Capitalisation implementation costs customer projects | 3 | (21 460) | (15 089) | (68 758) | (54 429) | (67 771) |
| Depreciation implementation costs customer projects | 3 | 8 959 | 7 316 | 23 850 | 22 807 | 31 638 |
| Customer project revenue deferred | 3 | 25 309 | 12 842 | 73 371 | 48 989 | 62 134 |
| Customer project revenue recognised | 3 | (6 554) | (4 234) | (19 556) | (13 176) | (20 807) |
| Taxes paid | (2 753) | - | (8 732) | (9 653) | (14 356) | |
| Changes in accounts receivable | (9 655) | (19 826) | (49 296) | (36 683) | (50 318) | |
| Changes in accounts payable | 3 116 | (4 409) | (13 682) | 14 466 | 27 150 | |
| Changes in other items | (4 178) | 3 723 | 17 544 | (11 699) | (10 020) | |
| Interest received | 612 | 68 | 1 617 | 106 | 308 | |
| Interest paid | (10 183) | (4 851) | (27 385) | (14 436) | (20 252) | |
| Net cash flow from operating activities | 15 255 | (10 615) | 14 418 | (12 001) | 422 | |
| Cash flows to investing activities | ||||||
| Investment in fixed and intangible assets | (4 229) | (8 014) | (13 688) | (18 031) | (27 845) | |
| Investment in fixed and intangible assets business combinations | - | - | (1 214) | - | ||
| Acquisition of subsidiaries, net of cash acquired | - | - | (10 103) | (11 317) | ||
| Net cash flow from investing activities | (4 229) | (8 014) | (13 688) | (29 348) | (39 163) | |
| Cash flows from financing activities | ||||||
| Sale of own shares | 881 | - | 881 | - | - | |
| Buyback of own shares | - | - | - | (17 768) | (17 768) | |
| Contribution from minority shareholder | - | 452 | 293 | 1 457 | 2 203 | |
| Payment of lease liabilities | (4 381) | (4 599) | (16 498) | (12 766) | (17 884) | |
| Net proceeds from new EUR 40m bond loan | - | (531) | 440 796 | (531) | - | |
| Repayment of loans | (170) | - | (400 346) | (3 501) | (2 901) | |
| Dividend payments to owners of the parent | - | - | - | (7 558) | (7 558) | |
| Net cash flow from financing activities | (3 670) | (4 679) | 25 125 | (40 667) | (43 909) | |
| Net changes in cash and cash equivalents | 7 356 | (23 307) | 25 854 | (82 015) | (82 650) | |
| Net foreign exchange difference | (199) | 2 094 | 1 445 | 1 379 | (120) | |
| Cash and cash equivalents at the beginning of the period | 113 592 | 116 801 | 93 451 | 176 224 | 176 224 | |
| Cash and cash equivalents at the end of the period | 120 749 | 95 588 | 120 749 | 95 588 | 93 451 |
| Currency | Non | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (NOK 1000) | Share capital |
Own shares |
Share premium |
Other paid in equity |
Total paid-in equity |
Other equity |
Retained earnings |
revaluation reserve |
Total | controlling interests |
Total equity |
| Equity at 01.01.2022 | 2 214 | (29) 157 370 | 3 657 | 163 211 | 14 519 | 54 607 | (23 328) | 209 009 | - | 209 009 | |
| Profit of the year | (25 165) | (25 165) | (1 457) | (26 622) | |||||||
| Other comprehensive income | 16 643 | 1 850 | 18 493 | 18 493 | |||||||
| Purchase of own shares | (35) | (35) | (17 743) | (17 778) | (17 778) | ||||||
| Share based payments | 6 225 | 6 225 | 6 225 | 6 225 | |||||||
| Share based payments | 10 | 2 271 | (2 281) | - | - | ||||||
| Other changes | 1 402 | 1 402 | (5 108) | 2 399 | (1 307) | (1 307) | |||||
| Dividend | (7 558) | (7 558) | (7 558) | ||||||||
| Equity at 30.09.2022 | 2 214 | (54) 159 641 | 9 003 | 170 803 | 9 411 | 23 183 | (21 478) 181 919 | (1 457) | 180 462 | ||
| Unaudited | |||||||||||
| Equity at 01.01.2023 | 2 214 | (54) 141 898 | 10 038 | 154 096 | 14 519 | 8 622 | (12 038) 165 198 | (1 602) | 163 596 | ||
| Profit/(loss) of the year | (23 081) | (23 081) | (761) | (23 842) | |||||||
| Other comprehensive income | 28 046 | 28 046 | 28 046 | ||||||||
| Share based payments | 8 789 | 8 789 | 8 789 | 8 789 | |||||||
| Exercise of share based payments | 1 | 131 | (132) | (5) | (5) | (5) | |||||
| Employee share purchase program | 4 | 1 015 | 1 019 | (139) | 881 | 881 | |||||
| Other changes | 99 | 99 | 99 | ||||||||
| Equity at 30.09.2023 | 2 214 | (49) 143 044 | 18 695 | 163 904 | 14 519 | (14 504) | 16 008 | 179 926 | (2 363) | 177 564 | |
| Unaudited |
Zalaris ASA (the Group) is a public limited company incorporated in Norway. The Group's main office is in Hoffsveien 4, Oslo, Norway. The Group delivers full-service outsourced personnel and payroll services.
These interim consolidated condensed financial statements are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU). The condensed consolidated interim financial statements do not include all the information and disclosures required by International Financial Reporting Standards (IFRS) for a complete set of financial statements, and these condensed interim financial statements should be read in conjunction with the annual financial statements. The interim condensed consolidated financial statements for the nine months ended 30 September 2023, have not been audited or reviewed by the auditors.
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December, 2022.
With reference to the Norwegian Accounting Act § 3-3, the Board confirms its belief that conditions exist for continuing operations and that these interim consolidated condensed financial statements have been prepared in accordance with the going concern principle.
The Company's operations are split into two main business segments: Managed Services and Professional Services. In addition investment in new business in Asia is presented as it's own segment – APAC.
Managed Services includes a full range of payroll and HR outsourcing services, such as payroll processing, time and attendance, travel expenses as well as related cloud system solutions and services. This includes additional cloud-based HR functionality to existing outsourcing customers such as talent management, digital personnel archive, HR analytics, mobile solutions, etc.
Professional Services includes deliveries of change projects based on Zalaris templates or implementation of customer-specific functionality. This business segment also assists with cost-effective maintenance and support of customers' own on-premises solutions. A large portion of these services are of recurring nature and many of the services are based on long-term customer relationships.
APAC includes the financial result from new businesses activities (e.g. the establishment of a new geographical region) are included as a separate column in the segment reporting, until the business is up and running at a normal level and included in one the two main segments. The objective is to provide information on the result of new business development activities that generally would generate a financial loss in an interim period, and to show the financial result of the existing business activities without the disturbance of these new business activities. This segment currently only consists of the new business in APAC (Australia and Singapore) established in the first quarter of 2022.
Group overhead and unallocated are the costs not allocated to business segments, and are mainly intercompany sales, interest-bearing loans and other associated expenses and assets related to administration of the Group.
Information is organized by business area and geography. The reporting format is based on the Group's management and internal reporting structure. Items that are not allocated are mainly intercompany sales, interestbearing loans and other associated expenses and assets related to the administration of the Group. The Group's executive management is the chief decision maker in the Group. The investing activities comprise total expenses in the period for the acquisition of assets that have an expected useful life of more than one year. The operating assets and liabilities of the Group are not allocated between segments.
| Managed | Professional | ||||
|---|---|---|---|---|---|
| (NOK 1 000) | Services | Services | APAC | Gr.Ovhd & Unallocated |
Total |
| Revenue, external | 200 005 | 73 076 | 4 379 | - | 277 459 |
| Operating expenses | (157 455) | (64 665) | (6 188) | (7 980) (236 287) | |
| EBITDA | 42 550 | 8 411 | (1 809) | (7 980) | 41 172 |
| Depreciation and amortisation | (13 857) | (1 788) | (238) | (7 651) (23 534) | |
| EBIT | 28 693 | 6 623 | (2 047) | (15 631) | 17 638 |
| Net financial income/(expenses) | 1 113 | 1 113 | |||
| Income tax | (3 192) | (3 192) | |||
| Profit for the period from continuing operations | 28 693 | 6 623 | (2 047) | (17 709) | 15 560 |
| Cash flow from investing activities | (4 229) |
2022 Jul-Sep
| Managed Professional Gr.Ovhd & |
|||||
|---|---|---|---|---|---|
| (NOK 1 000) | Services | Services | APAC | Unallocated | Total |
| Revenue, external | 160 628 | 61 349 | 1 587 | - | 223 564 |
| Operating expenses | (133 957) | (55 260) | (3 261) | (6 852) (199 330) | |
| EBITDA | 26 671 | 6 089 | (1 675) | (6 852) | 24 234 |
| Depreciation and amortisation | (10 214) | (2 276) | (21,9) | (7 366) (19 878) | |
| EBIT | 16 458 | 3 812 | (1 696) | (14 217) | 4 356 |
| Net financial income/(expenses) | - | (13 776) (13 776) | |||
| Income tax | - | 2 727 | 2 727 | ||
| Profit for the period from continuing operations | 16 458 | 3 812 | - | (25 267) | (6 694) |
| Cash flow from investing activities | (8 014) |
2023 Jan-Sep
| Managed | Professional | Gr.Ovhd & | |||
|---|---|---|---|---|---|
| (NOK 1 000) | Services | Services | APAC | Unallocated | Total |
| Revenue, external | 590 705 | 215 828 | 12 256 - | 818 788 | |
| Operating expenses | (474 188) | (189 744) | (18 274) | (26 459) (708 665) | |
| EBITDA | 116 517 | 26 084 | (6 019) | (26 459) | 110 123 |
| Depreciation and amortisation | (36 556) | (6 210) | (716) | (23 259) (66 741) | |
| EBIT | 79 961 | 19 874 | (6 735) | (49 718) | 43 382 |
| Net financial income/(expenses) | - | (58 642) (58 642) | |||
| Income tax | - | (974) | (974) | ||
| Profit for the period from continuing operations Cash flow from investing activities |
79 961 | 19 874 | (6 735) | (109 333) | (16 233) (13 688) |
2022 Jan-Sep (NOK 1 000) Managed Services Professional Services APAC Gr.Ovhd & Unallocated Total Revenue, external 458 842 181 192 2 157 - 642 191 Operating expenses (385 561) (158 813) (7 163) (17 234) (568 772) EBITDA 73 281 22 379 (5 007) (17 234) 73 419 Depreciation and amortisation (31 403) (6 814) (42) (21 162) (59 420) EBIT 41 878 15 565 (5 049) (38 396) 13 999 Net financial income/(expenses) - - - (34 884) (34 884) Income tax - - - 6 390 6 390 Profit for the period from continuing operations 41 878 15 565 (5 049) (66 889) (14 495) Cash flow from investing activities (29 348)
| Managed | Professional | Gr.Ovhd & | |||
|---|---|---|---|---|---|
| (NOK 1 000) | Services | Services | APAC | Unallocated | Total |
| Revenue, external | 644 801 | 243 138 | 4 803 | 892 742 | |
| Operating expenses | (535 860) | (213 699) | (10 878) | (26 119) (786 557) | |
| EBITDA | 108 941 | 29 439 | (6 076) | (26 119) | 106 185 |
| Depreciation and amortisation | (43 994) | (9 281) | (63) | (29 151) (82 489) | |
| EBIT | 64 947 | 20 158 | (6 139) | (55 270) | 23 695 |
| Net financial income/(expenses) | - | - | - | (40 102) (40 102) | |
| Income tax | - | - | - | (6 295) | (6 295) |
| Profit for the period from continuing operations | 64 947 | 20 158 | - | (101 667) | (22 702) |
| Cash flow from investing activities | (39 163) |
The Group's operations are carried out in several countries, and information regarding revenue based on geography is provided below. Information is based on the location of the entity generating the revenue, which to a large extent corresponds to the geographical location of the customers.
| Jul-Sep | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||||
| (NOK 1 000) | MS | PS | Total | as % of total | MS | PS | Total | as % of total |
| Norway | 53 261 | 230 | 53 490 | 19% | 50 869 | 157 | 51 026 | 23% |
| Northern Europe, excluding Norway | 79 939 | 241 | 80 180 | 29% | 68 171 | 1 225 | 69 396 | 31% |
| Central Europe | 57 756 | 58 004 | 115 760 | 42% | 36 385 | 53 042 | 89 427 | 40% |
| UK & Ireland | 9 049 | 14 600 | 23 649 | 9% | 5 203 | 6 926 | 12 129 | 5% |
| APAC | 1 479 | 2 899 | 4 379 | 2% | 613 | 974 | 1 587 | 1% |
| Total | 201 484 | 75 975 | 277 459 | 100% | 161 241 | 62 323 | 223 564 | 100% |
Jan-Sep
| 2023 | 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| (NOK 1 000) | MS | PS | Total | as % of total | MS | PS | Total | as % of total |
| Norway | 166 887 | 781 | 167 668 | 20% | 141 962 | 863 | 142 825 | 22% |
| Northern Europe, excluding Norway | 236 432 | 1 299 | 237 731 | 29% | 191 375 | 2 487 | 193 862 | 30% |
| Central Europe | 162 239 | 177 235 | 339 474 | 41% | 110 841 | 160 313 | 271 154 | 42% |
| UK & Ireland | 25 166 | 36 495 | 61 661 | 8% | 14 666 | 17 529 | 32 195 | 5% |
| APAC | 5 357 | 6 897 | 12 254 | 1% | 613 | 1 544 | 2 157 | 0% |
| Total | 596 082 | 222 707 | 818 789 | 100% | 459 455 | 182 736 | 642 192 | 100% |
The Group's revenue from contracts with customers has been disaggregated and presented in note 2.
Contract balances:
| 2023 | 2022 | 2022 | |
|---|---|---|---|
| (NOK 1 000) | 30. Sep | 30. Sep | 31. Dec |
| Trade receivables | 241 011 | 178 080 | 191 715 |
| Customer project assets | 187 688 | 131 478 | 135 359 |
| Customer project liabilities | (161 363) | (98 302) | (103 744) |
| Prepayments from customers | (16 205) | (18 868) | (18 711) |
Customer project assets are costs specific to a given contract, generate or enhance the Group's resources that will be used in satisfying performance obligations in the future, and are recoverable. These costs are deferred and amortized evenly over the period the outsourcing services are provided.
Customer project liabilities are prepayments from the customer specific to a given contract and are recognized as revenue evenly as the Group fulfills the related performance obligations over the contract period.
Prepayments from customers comprise a combination of short- and long-term advances from customers. The short-term advances are typically deferred revenues related to smaller projects or change orders related to the system solution. The long-term liabilities relate to initial advances paid upon signing the contract. These advances are contracted to be utilized by the customer to either transformation-, change- or other projects. These advances are open for application until specified, or when the contract is terminated, where the eventual remainder of the amount becomes the property of Zalaris and is hence rendered as income by the Group.
| 2023 | 2022 | 2023 | 2022 | 2022 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | 31. Dec |
| Opening balance in the period | 179 112 | 119 917 | 135 360 | 94 799 | 94 799 |
| Cost capitalised | 21 460 | 15 088 | 68 758 | 54 428 | 67 771 |
| Amortisation | (8 959) | (7 316) | (23 850) | (22 807) | (31 638) |
| Currency | (3 926) | 3 790 | 7 419 | 5 059 | 4 427 |
| Customer projects assets end of period | 187 687 | 131 479 | 187 687 | 131 479 | 135 360 |
| 2023 | 2022 | 2023 | 2022 | 2022 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Opening balance in the period | (147 462) | (94 181) | (103 744) | (66 452) | (66 452) |
| Revenue deferred | (25 309) | (12 842) | (73 371) | (48 989) | (62 134) |
| Revenue recognised | 6 554 | 4 234 | 19 556 | 13 176 | 20 807 |
| Currency | 4 854 | 4 488 | (3 805) | 3 964 | 4 035 |
| Customer project liabilities end of period | (161 363) | (98 302) | (161 363) | (98 302) | (103 744) |
| (NOK 1 000) | 2023 Jul-Sep |
2022 Jul-Sep |
2023 Jan-Sep |
2022 Jan-Sep |
2022 Jan-Dec |
|---|---|---|---|---|---|
| Salary | 121 719 | 102 689 | 377 599 | 302 710 | 416 264 |
| Bonus | 4 280 | 4 249 | 13 579 | 11 622 | 18 719 |
| Social security tax | 19 733 | 15 415 | 57 553 | 44 591 | 61 387 |
| Pension costs | 5 883 | 4 882 | 18 244 | 15 414 | 21 841 |
| Share based payments | 2 595 | 2 468 | 8 792 | 6 129 | 8 627 |
| Other personnel expenses | 3 839 | 4 400 | 12 092 | 11 663 | 14 992 |
| Capitalised to internal development projects | (1 848) | (4 343) | (4 815) | (6 069) | (14 540) |
| Capitalised to customer project assets | (17 349) | (9 582) | (51 486) | (31 073) | (43 466) |
| Total personnel expenses | 138 853 | 120 179 | 431 558 | 354 987 | 483 824 |
| (NOK 1 000) | 2023 Jul-Sep |
2022 Jul-Sep |
2023 Jan-Sep |
2022 Jan-Sep |
2022 Jan-Dec |
|---|---|---|---|---|---|
| Interest income on bank accounts and receivables | 598 | 66 | 1 480 | 104 | 304 |
| Currency gain | 1 524 | 2 311 | 3 635 | 4 733 | 6 028 |
| Other financial income | 13 | 16 | 207 | 335 | 1 232 |
| Finance income | 2 135 | 2 393 | 5 321 | 5 171 | 7 565 |
| Interest exp. on financial liab. measured at amortised cost | 10 183 | 4 458 | 27 385 | 12 958 | 18 522 |
| Currency loss | 1 722 | 50 | 32 121 | 3 134 | 5 518 |
| Interest expense on leasing | (3 449) | 611 | (2 050) | 1 621 | 2 237 |
| Other financial expenses | 5 203 | 2 756 | 8 060 | 4 655 | 5 829 |
| Finance expenses | 13 660 | 7 875 | 65 516 | 22 369 | 32 106 |
| Unrealized foreign exchange profit/(loss) | 12 638 | (8 294) | 1 554 | (17 685) | (15 561) |
| Net financial items | 1 113 | (13 776) | (58 642) | (34 883) | (40 102) |
| 2023 | 2022 | 2022 | |
|---|---|---|---|
| (NOK 1 000) | 30. Sep | 30. Sep | 31. Dec |
| Cash in hand and at bank - unrestricted funds | 117 917 | 89 331 | 87 706 |
| Deposit accounts - guarantee rent obligations - restricted funds | 2 698 | - | |
| Employee withheld taxes - restricted funds | 2 811 | 2 814 | 4 090 |
| Cash and cash equivalents continuing operations | 120 728 | 94 843 | 91 796 |
| Cash discontinued operations | 21 | 743 | 1 655 |
| Total cash and cash equivalents | 120 750 | 95 586 | 93 451 |
| 2023 | 2022 | 2022 | |||
|---|---|---|---|---|---|
| (NOK 1 000) | Annual interest | Maturity | 30. Sep | 30. Sep | 31. Dec |
| Bond loan | 3 m Euribor + 5.25% | 28.03.2028 | 441 761 | 368 416 | 368 208 |
| Commerzbank - DE | 1.3% | 31.12.2031 | 11 241 | 11 437 | 11 108 |
| De Lage Landen Finans | 7,05% | 31.01.2028 | 1 075 | 198 | 1 268 |
| Total interest-bearing loans | 454 077 | 380 051 | 380 584 | ||
| Total long-term interest-bearing loans | 452 503 | 10 200 | 10 891 | ||
| Total short-term interest-bearing loans | 1 574 | 369 851 | 369 693 | ||
| Total interest-bearing loans | 454 077 | 380 051 | 380 584 |
The Company's bond loan of EUR 40 million is listed on the Oslo Stock Exchange. The loan from Commerzbank DE relates to the office building in Leipzig, which is owned by the Company.
During Q3 2023, there were 120,000 new share options but no new RSUs granted to employees. As of 30 September 2023, there are 2,863,200 share options and 136,663 RSUs outstanding.
In June 2022, the Group decided to initiate a process to reduce its ownership in vyble GmbH ("vyble"), a subsidiary in which the Group has a 90 % ownership, and vyble was classified as a company held for sale and as a discontinued operation. An exit is expected to be completed in the fourth quarter 2023. The results of vyble for the period are presented below:
| 2023 | 2022 | 2023 | 2022 | 2022 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Revenue | 831 | 293 | 2 170 | 2 800 | 3 378 |
| Operating expenses | 3 531 | 5 542 | 11 631 | 17 576 | 23 747 |
| Operating loss | (2 700) | (5 248) | (9 461) | (14 776) | (20 369) |
| Finance costs | 105 | 400 | 295 | 771 | 167 |
| Profit/(loss) before tax from discontinued operation | (2 805) | (5 649) | (9 756) | (15 547) | (20 536) |
| Tax expense | 617 | 1 242 | 2 147 | 3 420 | 4 763 |
| Profit/(loss) for the year tax from discontinued operation | (2 188) | (4 406) | (7 609) | (12 127) | (16 018) |
The major classes of assets and liabilities of vyble classified as held for sale as at 30 June are as follows:
| 2023 | 2022 | 2022 | |
|---|---|---|---|
| (NOK 1 000) | 30. Sep | 30. Sep | 31. Dec |
| Intangible assets | 9 131 | 10 015 | 9 628 |
| Property, plant and equipment | 10 | 12 | 11 |
| Other current assets | 1 193 | 989 | 1 089 |
| Cash and cash equivalents | 21 | 743 | 1 655 |
| Total assets held for sale | 10 355 | 11 759 | 12 383 |
| Creditors | 784 | 3 384 | 1 500 |
| Interest-bearing loans and borrowings | 4 067 | 835 | 3 283 |
| Liabilties directly associated with assets held for sale | 4 851 | 4 219 | 4 783 |
| Net assets directly associated with disposal group | 5 504 | 7 540 | 7 600 |
| The net cash flows incurred by vyble are as follows: |
2023 2022 2023 2022 2022 (NOK 1 000) Jul-Sep Jul-Sep Jan-Sep Jan-Sep Jan-Dec Operating (2 039) (5 354) (7 115) (13 197) (18 828) Investing (130) (1 332) (190) (11 317) (11 592) Net cash outflow (2 169) (6 686) (7 305) (24 514) (30 420)
There have been no events after the balance sheet date significantly affecting the Group's financial position.
Zalaris' financial information is prepared in accordance with IFRS. In addition, financial performance measures (APMs) are used by Zalaris to provide supplemental information to enhance the understanding of the Group's underlying financial performance. These APMs take into consideration income and expenses defined as items regarded as special due to their nature and include among others restructuring provisions and write-offs. Financial APMs should not be considered as a substitute for measures of performance in accordance with IFRS. Disclosures of APMs are subject to established internal control procedures.
EBIT, earnings before interest and tax is defined as the earnings excluding the effects of how the operations where financed, taxed and excluding foreign exchange gains & losses. EBIT is used as a measure of operational profitability. EBITDA is before depreciation, amortization and impairment of tangible assets and in-house development projects. To abstract non-recurring or income not reflective of the underlying operational performance, the Group also lists the adjusted EBIT and EBITDA. Adjusted EBIT is defined as EBIT excluding non-recurring costs, costs relating to share based payments to employees, and amortization of excess values on acquisition. Adjusted EBITDA is EBITDA excluding non-recurring costs and costs relating to share based payments to employees, but after depreciation of right-of-use assets.
| 2023 | 2022 | 2023 | 2022 | 2022 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| EBITDA | 41 205 | 24 290 | 110 262 | 73 838 | 106 184 |
| Cost incurred in establishing AMS centre in Poland | - | - | - | 1 906 | 1 906 |
| Share-based payments | 2 601 | 2 520 | 8 789 | 6 225 | 8 706 |
| Depreciation right-of-use assets (IFRS 16 effect) | (5 880) | (4 768) | (16 906) | (13 343) | (18 535) |
| Adjusted EBITDA | 37 926 | 22 041 | 102 145 | 68 626 | 98 261 |
| 2023 | 2022 | 2023 | 2022 | 2022 | |
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| EBIT | 17 638 | 4 356 | 43 383 | 13 998 | 23 695 |
| Cost incurred in establishing AMS centre in Poland | - | - | - | 1 906 | 1 906 |
| Share-based payments | 2 601 | 2 520 | 8 789 | 6 225 | 8 706 |
| Amortization of excess values on acquisition | 3 426 | 2 873 | 10 196 | 8 822 | 11 935 |
| 2023 | 2022 | 2023 | 2022 | 2022 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Managed Services - EBIT | 28 693 | 16 458 | 79 961 | 42 318 | 64 667 |
| Cost incurred in establishing AMS centre in Poland | - | 1 906 | 1 906 | ||
| Share-based payments | 637 | 1 073 | 3 868 | 2 334 | 2 881 |
| Managed Services - adjusted EBIT | 29 330 | 17 531 | 83 829 | 46 558 | 69 454 |
| 2023 | 2022 | 2023 | 2022 | 2022 | |
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Professional Services - EBIT | 6 623 | 3 812 | 19 874 | 15 565 | 19 992 |
| Share-based payments | 379 | 413 | 789 | 831 | 1 014 |
| Professional Services - adjusted EBIT | 7 002 | 4 226 | 20 663 | 16 396 | 21 006 |
*Relates mainly to redundancy costs/severance pay for employees
| 2023 | 2022 | 2023 | 2022 | 2022 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| New business (APAC) - EBIT | (2 047) | (1 696) | (6 735) | (5 489) | (6 139) |
| Share-based payments | 69 | 128 | - | ||
| New business (APAC) - adjusted EBIT | (1 978) | (1 696) | (6 607) | (5 489) | (6 139) |
| 2023 | 2022 | 2023 | 2022 | 2022 | |
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Group overhead/unallocated - EBIT | (15 631) | (14 217) | (49 718) | (38 396) | (54 826) |
| Restructuring costs* | - | - | - | ||
| Mergers & Acquisitions | - | - | - | ||
| Share-based payments | 1 515 | 1 034 | 4 004 | 3 060 | 4 811 |
| Amortization of excess values on acquisition | 3 426 | 2 873 | 10 196 | 8 822 | 11 935 |
| Group overhead/unallocated - adjusted EBIT | (10 689) | (10 311) | (35 518) | (26 514) | (38 079) |
ARR is defined as the annualised value of revenue the Company expects to receive from SaaS (software as a service) and BPaaS (business process as a service) contracts with customers, but excludes change orders that do not result in regular future revenue. The ARR is calculated by taking the revenue for Managed Services in the applicable quarter, adjusted for change orders and contracts that have not generated revenue for part of the quarter (revenue from customers that have exited during the quarter is deducted, and estimated revenue for new contracts that have gone live during the quarter is added), multiplied by four. Contracted ARR includes the ARR at the end of the quarter, plus the estimated ARR of new contracts yet to go live.
Net Retention is the percentage of revenue retained from Managed Services customers over a 12 months period. This figure takes into account any changes in revenue resulting from alterations in services, products and volumes, as well as any lost revenue from customer attrition. Net Retention at the end of a given quarter is calculated by starting with the Managed Services revenue from the same quarter prior year, but excluding revenue from customers who had not fully implemented our solutions or services in that quarter. The next step is to measure the revenue from the same customers in the current quarter, using a constant currency (ref. definition below). This amount is then divided by the revenue from the same quarter prior year to obtain the Net Retention rate.
The following table reconciles the reported growth rates to a revenue growth rate adjusted for the impact of foreign currency. The impact of foreign currency is determined by calculating the current period's revenue using the foreign exchange rates consistent with the same period prior year.
| 2023 | 2022 | 2023 | 2022 | 2022 | |
|---|---|---|---|---|---|
| Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec | |
| Revenue growth, as reported | 24,1 % | 14,4 % | 27,5 % | 12,0 % | 15,2 % |
| Impact of foreign currency | -10,7 % | 3,1 % | -10,8 % | 2,5 % | 1,3 % |
| Revenue growth, constant currency | 13,4 % | 17,5 % | 16,7 % | 14,5 % | 16,5 % |
| Managed Services revenue growth, as reported | 24,5 % | 21,2 % | 28,7 % | 18,7 % | 21,7 % |
| Impact of foreign currency | -9,2 % | 3,0 % | -9,3 % | 2,5 % | 1,4 % |
| Managed Services revenue growth, constant currency | 15,3 % | 24,2 % | 19,4 % | 21,2 % | 23,1 % |
| Professional Services revenue growth, as reported | 19,1 % | -2,5 % | 19,1 % | -3,1 % | -1,0 % |
| Impact of foreign currency | -15,0 % | 3,5 % | -14,1 % | 2,6 % | 1,3 % |
| Professional Services revenue growth, constant currency | 4,1 % | 1,0 % | 5,0 % | -0,5 % | 0,3 % |
Net interest-bearing debt (NIBD), consists of interest-bearing liabilities, less cash and cash equivalents.
The Group risk of default and financial strength is measured by the net interest-bearing debt.
| 2023 | 2022 | 2022 | |
|---|---|---|---|
| (NOK 1 000) | 30. Sep | 30. Sep | 31.des |
| Cash and cash equivalents continuing operations | 120 728 | 94 843 | 91 796 |
| Cash and cash equivalents discontinuing operations | 21 | 743 | 1 655 |
| Interest-bearing loans and borrowings - long-term | 452 503 | 10 200 | 10 891 |
| Interest bearing loans and borrowings - short-term | 1 574 | 369 851 | 369 693 |
| Net interest-bearing debt (NIBD) | 333 327 | 284 465 | 287 133 |
The ratio of the total number of normal agreed working hours for all employees (part-time or full-time) by the number of normal full-time working hours in that period (i.e. one FTE is equivalent to one employee working full-time).
| (NOKm unless otherwise stated) | Q3 2021 | Q4 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 |
|---|---|---|---|---|---|---|---|---|---|
| Revenues | 195,4 | 201,7 | 208,4 | 210,2 | 223,6 | 250,6 | 260,8 | 280,5 | 277,5 |
| Revenue growth (YoY) | 3,0 % | -0,9 % | 8,1 % | 13,4 % | 14,4 % | 24,2 % | 25,1 % | 33,5 % | 24,1 % |
| EBITDA adjusted EBITDA margin adjusted |
26,9 13,8 % |
24,9 12,3 % |
27,5 13,2 % |
19,1 9,1 % |
22,0 9,9 % |
29,6 11,8 % |
29,6 11,3 % |
34,6 12,3 % |
37,9 13,7 % |
| EBIT adjusted | 14,1 | 10,2 | 14,4 | 6,8 | 9,7 | 15,3 | 18,5 | 20,2 | 23,7 |
| EBIT margin adjusted | 7,2 % | 5,1 % | 6,9 % | 3,2 % | 4,4 % | 6,1 % | 7,1 % | 7,2 % | 8,5 % |
| EBIT | 7,7 | 1,5 | 4,7 | 1,2 | 4,4 | 13,3 | 12,8 | 12,7 | 17,6 |
| EBIT margin | 4,0 % | 0,7 % | 2,2 % | 0,6 % | 1,9 % | 5,3 % | 4,9 % | 4,5 % | 6,4 % |
| Profit Before Tax | 1,0 | 1,7 | 14,7 | (26,2) | (9,4) | 4,9 | (25,1) | (8,9) | 18,8 |
| Income Tax Expense | (0,4) | (0,3) | (1,5) | 5,2 | 2,7 | (12,7) | 2,6 | (0,4) | (3,2) |
| Net income | 0,7 | 1,3 | 13,2 | (21,0) | (6,7) | (8,2) | (22,5) | (9,3) | 15,6 |
| Profit margin | 0,3 % | 0,7 % | 6,3 % | -10,0 % | -3,0 % | -3,3 % | -8,6 % | -3,3 % | 5,6 % |
| Weighted # of shares outstanding (m) | 21,1 | 21,3 | 21,5 | 21,6 | 21,6 | 21,6 | 21,6 | 21,6 | 21,6 |
| Basic EPS (NOK) | 0,03 | 0,06 | 0,44 | (0,72) | (0,95) | (0,56) | (1,20) | (0,52) | 0,62 |
| Diluted EPS (NOK) | 0,03 | 0,06 | 0,41 | (0,72) | (0,95) | (0,56) | (1,20) | (0,52) | 0,62 |
| Cash flow items | |||||||||
| Cash from operating activities | 13,4 | 23,2 | (4,4) | 3,0 | (10,6) | 12,4 | (4,1) | 3,3 | 15,3 |
| Investments | (8,4) | (6,2) | (4,7) | (6,5) | (8,0) | (9,8) | (4,8) | (4,7) | (4,2) |
| Net changes in cash and cash equi. | (41,3) | 7,5 | (41,3) | (17,4) | (23,3) | (2,1) | 27,1 | (8,6) | 7,4 |
| Cash and cash equivalents end of period | 168,8 | 176,2 | 134,7 | 116,8 | 95,6 | 93,5 | 124,1 | 113,6 | 120,8 |
| Net interest-bearing debt | 198,1 | 183,0 | 212,9 | 254,4 | 284,5 | 287,1 | 332,9 | 356,3 | 333,3 |
| Total equity | 208,4 | 207,3 | 189,7 | 182,4 | 180,5 | 163,6 | 168,9 | 176,7 | 177,6 |
| Equity ratio | 24,9 % | 25,0 % | 23,1 % | 20,9 % | 20,1 % | 18,1 % | 16,3 % | 16,8 % | 20,9 % |
| FTEs (quarter end) | 781 | 795 | 838 | 884 | 915 | 963 | 983 | 987 | 1 004 |
Hans-Petter Mellerud CEO [email protected] +47 928 97 276
Q4 2023 to be published on 29 February 2024
All financial information is published on the Zalaris' website: http://www.zalaris.com/Investor-Relations/
Financial reports can also be ordered at [email protected].
Zalaris ASA PO Box1053 Hoff 0218 Oslo Norway
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