Quarterly Report • Oct 26, 2022
Quarterly Report
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| Q3 2022 | |
|---|---|
| One-stop HR platform |
| Q3 HIGHLIGHTS 3 | |
|---|---|
| KEY FIGURES 4 | |
| CEO INSIGHTS 5 | |
| FINANCIAL REVIEW 7 | |
| ALTERNATIVE PERFORMANCE MEASURES (APMS)26 | |
| KEY FIGURES 29 |
Payroll & HR Solutions that enable fully digital organizations - we simplify HR and payroll administration and empower you with useful information so that you can invest more in people
Zalaris ranks among Europe's top providers of human capital management (HCM) and payroll solutions – addressing the entire employee lifecycle, from recruiting and onboarding to compensation, time and attendance, travel expenses and performance management.
Our proven local and multi-country delivery models include: on-premise implementations, software as a service (SaaS), cloud integration and business process outsourcing (BPO). Furthermore, Zalaris' experienced consultants and advisors cover all industries and IT environments.
Headquartered in Oslo, Norway, and publicly traded on the Oslo Stock Exchange (ZAL), we serve more than one million employees each month, across multiple industries and with many of Europe's most reputable employers. We have generated uninterrupted growth since our founding in 2000 and today operate in the Nordics, Baltics, Poland, Germany, Austria, Switzerland, France, Spain, India, Ireland, the UK and Australia.
3 Zalaris ASA Interim Report Q3 2022 www.zalaris.com
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Revenue | |||||
| Managed Services | 160 628 | 132 455 | 458 842 | 386 671 | 529 685 |
| Professional Services | 61 349 | 62 922 | 181 192 | 186 899 | 245 580 |
| New business (APAC) | 1 587 | - | 2 157 | - | - |
| Total revenue | 223 564 | 195 376 | 642 191 | 573 570 | 775 265 |
| Adjusted EBIT1) | |||||
| Managed Services | 17 531 | 17 513 | 46 839 | 49 710 | 66 440 |
| Professional Services | 4 226 | 4 608 | 16 562 | 13 791 | 18 816 |
| HQ (unallocated costs) | (10 311) | (7 983) | (26 959) | (24 156) | (35 681) |
| Adj. EBIT (ex. APAC) | 11 446 | 14 138 | 36 442 | 39 345 | 49 575 |
| Adj. EBIT margin (ex. APAC) | 5,2 % | 7,2 % | 5,7 % | 6,9 % | 6,4 % |
| New business (APAC) | (1 696) | - | (5 489) | - | - |
| Adj. EBIT | 9 749 | 14 138 | 30 953 | 39 345 | 49 575 |
| Share-based payments | (2 520) | (2 641) | (6 225) | (3 932) | (5 723) |
| Amortisation excess value on acquisitions | (2 873) | (2 974) | (8 822) | (8 176) | (11 469) |
| Other | - | (774) | (1 907) | (6 123) | (9 798) |
| EBIT | 4 356 | 7 749 | 13 999 | 21 114 | 22 585 |
| EBIT margin (%) | 1,9 % | 4,0 % | 2,2 % | 3,7 % | 2,9 % |
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Revenue | 223 564 | 195 376 | 642 191 | 573 569 | 775 265 |
| Growth (YoY) | 14,4 % | 3,0 % | 12,0 % | -2,6% | 4,2 % |
| EBIT | 4 356 | 7 749 | 13 998 | 21 114 | 22 585 |
| Adjusted EBIT1) (ex. APAC) | 11 446 | 14 138 | 36 442 | 39 345 | 49 575 |
| Adjusted EBIT margin (as % of revenue) | 5,2 % | 7,2 % | 5,7 % | 6,9 % | 6,4 % |
| Profit/(loss) for the period | (11 100) | 663 | (26 622) | 11 722 | 12 812 |
| Earnings per share (EPS) | (0,95) | 0,03 | (1,23) | 0,56 | 0,60 |
| Total comprehensive income | (3 110) | (1 421) | (8 130) | 3 621 | 1 148 |
| Free cash flow1) | (18 628) | 4 991 | (30 030) | (4 604) | 12 407 |
| Net interest-bearing debt (NIBD)1) | 284 465 | 198 057 | 284 465 | 198 057 | 183 019 |
1) Defined in separate section Alternative Performance Measure (APMs)
In Q3 #teamZalaris continued its strong growth delivering record high revenues of NOK 223.6 million up 17.5% from NOK 195.4 million YoY in constant currency, and is on track to deliverer on the target to become a 1 billion NOK revenue company in 2023. Adjusted EBIT (ex APAC) was NOK 11.4 million, down from NOK 14.1 million in the same period last year, mainly due to costs related to build-up of capacity to handle projects under implementation. To firm up our goal of delivering an annualised adj. EBIT of NOK 100 million (10%) by the end of 2023, the company has launched a formalized EBIT improvement program.
Within Managed Services, we continued our growth journey by signing three new long-term agreements. Zalaris shall deliver PeopleHub based payroll solutions serving pharmaceutical company CSL Behring with a total of 7,800 employees in Germany & Switzerland, hearing aid retailer Amplifon with 2,500 employees in Germany, and a SaaS payroll solution based on Zalaris PeopleHub for 3,000 employees to international payroll company iiPay's end customer in Germany.
During the quarter we see first signs of business normality post Covid, with volume increase relating to travel expenses and associated services.
Our Professional Services units operate at full utilisation, and have signed a number of new customer agreements.
All our regions left the quarter with a strong pipeline, and a number of new potential agreements are targeted to be closed in Q4. We are well on our way to deliver on our 2022 sales target of selling NOK 100 million annual contract value of PeopleHub based solutions and services to secure continuing 10% growth through 2023 and 2024
We clearly see that we leverage our combined Professional- and Managed Services capabilities, and our strengthened brand in Germany and UK, supporting the achievement of our 2023 sales targets.
During the last quarter we have also managed to renegotiate certain key contracts that will support our targets of 10% cash margin.
During the quarter we launched a formalized program with the goal of improving annualized EBIT with NOK 40 - 50 million with Q2 as baseline.
Key elements of the program include:
We see some cost inflation and wage pressure, but are reasonably protected through contracted price indexation clauses in the majority of our agreements.
We are monitoring the position closely with the aim of maintaining and further improving our competitive cost position delivering on our defined EBIT margin target of 10%.
Zalaris solutions and services support customers focusing on their core business and reducing the fixed cost-base. Increased flexibility is becoming crucial to succeed in a complicated business environment. Our key deliveries like variable costs, streamlining operations, recruit and retain critical talent is paramount for our customers success. Thus, we believe that demand for Zalaris' solutions and services will increase as recession-like tendencies and uncertainty becomes predominant. It is in periods like these that outsourcing based delivery models have excelled in the past.
At the same time, we benefit from an underlying positive market for multi-country payroll and cloudbased HR services with double-digit growth rates.
Zalaris is well positioned with global delivery capability and is ready to take on new large projects helping customers simplify work life and achieve more.
Consolidated revenue for the third quarter 2022 amounted to NOK 223.6 million (Q3 2021: NOK 195.4 million). The revenue increase was +14.4%. Measured in constant currency the increase was +17.5%.
The increase in revenue compared to last year is mainly from new customers within Managed Services, as well as increased volume of change orders.
During the third quarter, Zalaris signed a five-year agreement with the global pharmaceutical company CSL Behring, to served the company's 7,800+ employees in Germany and Switzerland. The solution that will be implemented over the next 18 months with first go-live in July 2023 is based on Zalaris PeopleHub integrated with Workday as the global HR solution.
Zalaris has also signed a five-year agreement with Amplifon, an international hearing aid retailer, to deliver a new outsourced payroll solution and outsourcing services to serve its 2,000+ employees in Germany.
New contracts signed during the quarter has total annual recurring revenue of approx. NOK 25 million.
The Group has signed several new BPaaS/SaaS contracts within Managed Services ("MS") during the last 6 - 12 months that have not yet been implemented. These will start generating monthly recurring revenue as soon as the contracts go live.
As an illustration of the future revenue impact of new signed contracts that have not gone live as of 30 September 2022, the table below shows the annual recurring revenue ("ARR") within MS at the end of the third quarter, and how the ARR will increase, when these contracts have been implemented.
* Please refer to the APMs section of this report for definition of ARR and contracted ARR
The net ARR to be implemented from new contracts (NOK 68 million) represents an increase in total annual revenue for Zalaris of +8.1% (when compared to total revenue last twelve months – LTM Q3 2022).
The figure below shows the timing of the expected increase in the ARR for MS, based on signed contracts.
Revenue in the Nordic & Baltic region was NOK 120.4 million in the third quarter. Adjusted for negative currency effects, the revenue was 20.6% higher than the figure last year of NOK 102.2 million. This was explained by the implementation of new customers and additional change orders (+NOK 7.6 million), partly offset by non-renewals.
Revenue in the Central Europe region was NOK 89.4 million in the third quarter, compared to NOK 82.7 million last year. An increase of +11.8%, when
adjusted for negative currency effects. The revenue was approximately 6.7% higher when adjusted for the inclusion of bas.se (consolidated from August 2021).
The organic growth came from Professional Services in Poland and from new customers in Managed Services in Germany.
Within Professional Services, Poland and Germany showed a revenue growth of +27.4% and -7.1% respectively in local currency compared to last year. Managed Services in Germany grew by +32.0% in the same period.
Revenue in the UK & Ireland region amounted to NOK 12.1 million in the third quarter, compared to NOK 10.4 million in the same quarter last year, an increase of +20.2% in local currency. There has been increased activity within Manage Services, a key focus area in the region, resulting in revenue within this segment increasing significantly. However, as Professional Services resources have been utilized on the implementation of new SaaS contracts in Managed Services (recognised as deferred revenue), this has had a negative impact on revenue in the Professional Service segment.
The adjusted EBIT, before EBIT from New Business (APAC), was NOK 11.4 million for the third quarter (NOK 14.1 million), a decrease of 19.1%. The decrease is largely explained by onboarding of new customers, recruitment and training of new personnel, and the optimisation of resources to deliver on the new customers contracts that haven been, or will be, implemented. This has been partly offset by the contribution from increased revenue.
The adjustments made to EBIT were the calculated costs of the Company's share-based payment plan (NOK 2.5 million), amortisation of excess values on acquisitions (NOK 3.0 million).
The EBIT from New business (APAC) was negative NOK 1.7 million in the third quarter. The financial result from new businesses 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. 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 activities.
The APAC region is a greenfield establishment and had revenue of NOK 1.6 million in the third quarter, up from NOK 0.6 million in the previous quarter.
Consolidated EBIT for the quarter was NOK 4.4 million (NOK 7.3 million). The variance from last year is due to the investment in APAC (New business) and the operational issues noted above.
The Group had net financial expense of NOK 13.8 million for the third quarter (net expense NOK 6.7 million), including an unrealised currency loss of NOK 8.3 million (NOK 0.5 million) relating to the EUR 35 million bond loan and other foreign currency denominated balances.
The net loss for the quarter was NOK 10.5 million (loss NOK 0.7 million), after the unrealised currency loss of NOK 8.3 million and a loss from discontinued operations of NOK 4.4 million.
Total comprehensive income amounted to negative NOK 3.1 million (negative NOK 1.4 million), after currency translation differences of NOK 8.0 million (negative NOK 2.1 million) relating to foreign subsidiaries.
Zalaris has made a detailed plans for EBIT improvement of minimum NOK 40 – 50 million by the end of 2023. The increased EBIT will be realised through direct cost improvements and improved allocation of resources of NOK 20 - 30 million and contribution from new signed contracts of approx. NOK 20 million.
On a country level our target EBIT margin is 15 – 20% per entity – depending on size - before any allocation of group costs. Well performing countries are characterized with a high degree of standardization and customer deliveries based on one common Zalaris Peoplehub platform combined with meeting target level of near- and offshoring usage in the resource mix. In addition, scale and product mix are significant factors driving profitability.
The EBIT margin (%) year-to-date per country is shown in the graph below.
EBIT% YTD Q3'22 per country
Analysing EBIT margin year to date per country, we see UKI with a high degree of PeopleHub SaaS based services deliver on our target margin criteria despite having a modest scale. Norway on the other hand continue its performance – despite being slightly down this year – mainly contributable to the scale of the business. Denmark and Sweden are on their toward target margin through increased use of near/offshoring and digitization of processes. Poland is temporarily hit by building up capacity to cater for added nearshoring from the Nordics and Germany of SAP HCM and SuccessFactors application maintenance services.
In our German units, service delivery – despite being powered by SAP based solutions – has traditionally been provided on the basis of individual and customer specific system configurations. Including using various ticketing and service management solutions. Add to this minimal use of near- and offshore resources, and a tight labour market resulting in extensive use of external consultants to deliver on contracted commitments. As part of our EBIT improvement projects we have initiated a number of actions to improve the situation including implementing Zalaris' standard service management concept and workflow. This enables increased use of Robotics Process Automation and seamless transport of work to our delivery centres in Latvia, Poland, and India. This will reduce our total resource costs and allow us to compensate critical customer facing resources better with the aim of increasing the attraction and retention of these as well as optimizing our dependency on external consultants. Starting from 2022 all customer projects are implemented on our scalable multi-tenant PeopleHub solution. This allows driving scalability and margin improvement of new projects to matching those in the UKI and Nordics.
The above activities are organized as a formalized EBIT improvement program reporting to the CEO targeting minimum NOK 40 – 50 million improvements by the end of 2023.
The Managed Services ("MS") segment had revenue of NOK 160.6 million for the third quarter 2022, compared to NOK 132.5 million in the same quarter last year. The increase was +24.2% when adjusted for negative currency effects. The inclusion of ba.se service & consulting GmbH ("ba.se"), consolidated from July 2021 added NOK 4.3 million (+3.2%), while the remaining increase of +21.0% is mainly due to revenue from new customers that have gone live since the third quarter last year, and additional change orders, partly offset by non-renewals.
As noted earlier in this report, Zalaris has entered into a large number of new MS contracts that are being implemented. As a result of the increased number of new contracts, more resources are being utilized on contract implementation, compared to last year, resulting in increased deferred revenue, which will result in increased revenue as the projects go live during 2022 and onwards. MS revenue deferred for the third quarter was NOK 12.8 million, compared to NOK 8.5 million last year, an increase of 51%.
The EBIT for MS for the third quarter was NOK 16.4 million (NOK 16.4 million), and EBIT margin was 10.2% (12.4%). EBIT margin was negatively impacted by start-up costs and resource build-up for new contracts being implemented.
The planned EBIT improvement of NOK 40 – 50 million by the end of 2023, described earlier in this report, mainly relates to Managed Services.
Revenue in the Professional Service ("PS") segment amounted to NOK 61.3 million for the third quarter 2022, compared to NOK 62.9 million last year. When adjusted for negative currency movements the increase was approximately 1.0% year-on-year. Higher revenue in Poland, was offset by lower revenue in Germany and UK. The reduction in these countries is mainly due to PS resources being utilized implementing new MS contracts, which has resulted in increased deferred revenue (invoiced but not recognized). The largest PS countries Poland and Germany showed a revenue growth of +27.4% and -7.1% respectively, in local currency.
Revenue Professional Services (NOKm)
The EBIT for PS for the third quarter was NOK 3.8 million (NOK 4.1 million). The marginally lower EBIT is mainly due to a higher allocation of regional overhead.
During the first quarter this 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 the fastest growing markets for multi-country payroll. The new region will be offering both Professional Services and Managed Services, and currently has 16 employees. The new region will be reported separately ("New Business") until it has reach a sustainable business level.
The new region is an early-stage business, and had revenue and EBIT of NOK 1.6 million and negative NOK 1.7 million respectively in the third quarter.
The new region signed its first major contract for the implementation of a HR solution for seafood company, Sealord, during 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.
Zalaris has engaged an investment bank to sell vyble to limit the future funding requirements and allowing Zalaris to focus entirely on the continued growth of its PeopleHub based business. The sales process is ongoing. The investment in vyble has thus been reclassified to assets held for sale and as a discontinued operation.
Zalaris had total assets of NOK 898.7 million as of 30 September 2022, compared to NOK 873.7 million on 30 June 2022.
Cash and cash equivalents were NOK 95.6 million as of 30 September 2022, a decrease of NOK 21.2 million from the end of the previous quarter. The reduction in cash is mainly due to an increase in trade receivables and a negative cash flow from New businesses (APAC) and discontinued operations (vyble).
Total equity as of 30 September 2022 was NOK 180.5 million, compared to NOK 182.4 million as of 30 June 2022. This corresponds to an equity ratio of 20.1% (20.8%).
The Company holds 540,693 own shares at 30 September 2022.
Net interest-bearing debt (interest-bearing debt less cash and cash equivalents) increased from NOK 254.4 million on 30 June 2022 to NOK 284.5 million on 30 September 2022.
Zalaris is well positioned for future revenue growth, having signed an all-time high level of new long-term BPaaS/SaaS contracts within Managed Services during the last 18 months. This high activity level is continuing into Q4 with several new large multicountry contracts in the near- to medium term pipeline where Zalaris is selected as the preferred supplier.
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 has made a detailed plan for EBIT improvements of NOK 40 – 50 million by the end of 2023. The improvement will come through cost optimisations of NOK 25 – 30 million and contribution from new signed contracts of NOK 20 - 25 million. Further automation of our delivery processes, more optimised use of resources from The increase in net interest-bearing debt is mainly due to the reduction in cash noted above, and a stronger EUR vs. NOK, which increases the NOK value of the EUR denominated bond loan.
Operating cash flow during the third quarter 2022 was negative NOK 10.6 million (positive NOK 13.4 million). The negative cash flow was mainly contributed to by an increase in trade receivables at 30 September 2022 of NOK 19.8 million and a loss before tax from discontinued operations of NOK 5.6 million.
Net cash flow from investing activities for the third quarter was negative NOK 8.0 million (negative NOK 8.4 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 6.1 million (NOK 3.8 million), mainly relating to lease payments of NOK 4.6 million.
There have been no events after the balance sheet date, which have had a material effect on the issued accounts.
different Zalaris locations including offshoring, are key targets for 2022. New contracts might require additional resources to for example process payroll and render support. The recruitment and on-the-job training for this new personnel may have a shortterm negative impact on margins until the new employees are trained and can be fully utilized. Zalaris remains firm on its' target EBIT margin of 10%.
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 Metsä and Yunex Traffic, won in 2021, and CSL Behring, won in 2022. Growth will also come from expanding the service offering to
existing customers including increasing geographic coverage, as we have done with customers as Siemens, Tryg, and Ericsson.
Zalaris is expanding its geographical coverage both in Europe and the Asia-Pacific region to strengthen its competitive position in this market. While the company previously established own subsidiaries in new countries, a revised expansion strategy is being implemented using in country partners processing on the basis of Zalaris' PeopleHub solution. This enables profitable geographic expansion with low and moderately size employee volumes.
The global macro picture with high inflation, affecting salary levels, increasing 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 for new positions is challenging in some markets. Most of our long-term contracts within Managed Services have provisions for annual indexation to cover general salary increases. Historically, we have seen an increased interest in the market for outsourcing when companies are required to focus on operational efficiencies and cost reductions in a recessionary environment.
Zalaris is not directly affected by the war in Ukraine, and has no operations or customers in Ukraine or Russia. However, the company is following the developments closely.
The underlying fundamentals remain strong, and Zalaris has entered Q4 with a solid pipeline of potential new sales in all regions exceeding the delivery of the annual organic revenue growth target of 10% throughout 2023.
The Board of Directors of Zalaris ASA Oslo, 25 October 2022
| (NOK 1 000) | 2022 Jul-Sep |
2021 Jul-Sep |
2022 Jan-Sep |
2021 Jan-Sep |
2021 Jan-Dec |
|
|---|---|---|---|---|---|---|
| Notes | unaudited | unaudited | unaudited | unaudited | ||
| Revenue | 2 | 223 564 | 195 376 | 642 191 | 573 569 | 775 265 |
| Operating expenses | ||||||
| License costs | 20 704 | 17 200 | 61 120 | 48 963 | 67 481 | |
| Personnel expenses | 4 | 120 179 | 98 730 | 343 792 | 303 753 | 405 949 |
| Other operating expenses | 58 392 | 51 676 | 163 441 | 142 399 | 199 886 | |
| Depreciation and impairments | 672 | 990 | 2 489 | 2 505 | 4 078 | |
| Depreciation right-of-use assets | 4 768 | 4 246 | 13 343 | 12 017 | 16 114 | |
| Amortisation intangible assets | 7 177 | 7 447 | 21 201 | 21 802 | 29 296 | |
| Amortisation implementation costs customer projects | 3 | 7 316 | 7 338 | 22 807 | 21 017 | 29 874 |
| Total operating expenses | 219 208 | 187 627 | 628 193 | 552 456 | 752 679 | |
| Operating profit (EBIT) | 4 356 | 7 749 | 13 998 | 21 114 | 22 585 | |
| Financial items | ||||||
| Financial income | 5 | 2 393 | 1 123 | 5 170 | 3 906 | 5 491 |
| Financial expense | 5 | (7 875) | (8 353) | (22 370) | (22 244) | (29 031) |
| Unrealized foreign exchange gain/(loss) | 5 | (8 294) | 501 | (17 684) | 10 690 | 15 968 |
| Net financial items | (13 776) | (6 729) | (34 884) | (7 647) | (7 571) | |
| Profit before tax from continuing operations | (9 420) | 1 020 | (20 886) | 13 467 | 15 014 | |
| Tax expense | 2 727 | (357) | 6 390 | (1 744) | (2 203) | |
| Profit for the period from continuing operations | (6 694) | 663 | (14 496) | 11 722 | 12 812 | |
| Profit/(loss) after tax for the year from discontinued operations |
9 | (4 406) | - | (12 127) | - | - |
| Profit for the period | (11 100) | 663 | (26 622) | 11 722 | 12 812 | |
| Profit attributable to: | ||||||
| - Owners of the parent | -10 625 | 663 | -25 410 | 11 722 | 12 812 | |
| - Non-controlling interests | -475 | 0 | -1 213 | 0 | 0 | |
| Earnings per share: | ||||||
| Basic earnings per share (NOK) | (0,95) | - | (1,23) | 0,56 | 0,60 | |
| Diluted earnings per share (NOK) | (0,95) | - | (1,23) | 0,52 | 0,56 | |
| Earnings per share for continuing operations: | - - |
|||||
| Basic earnings per share (NOK) | (0,29) | 0,03 | (0,67) | - | - | |
| Diluted earnings per share (NOK) | (0,29) | 0,03 | (0,67) | - | - |
| 2021 | 2021 | 2022 | 2021 | 2021 | ||
|---|---|---|---|---|---|---|
| (NOK 1 000) | Notes | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| unaudited | unaudited | unaudited | unaudited | |||
| Profit for the period | (11 100) | 663 | (26 622) | 11 722 | 12 812 | |
| Other comprehensive income | ||||||
| Items that will be reclassified to profit and loss in subsequent periods | ||||||
| Currency translation differences | 7 991 | (2 084) | 18 493 | (8 101) | (11 664) | |
| Total other comprehensive income | 7 991 | (2 084) | 18 493 | (8 101) | (11 664) | |
| Total comprehensive income | (3 110) | (1 421) | (8 130) | 3 621 | 1 148 | |
| Total comprehensive income attributable to: | ||||||
| - Owners of the parent | (3 045) | (1 421) | (9 343) | 3 621 | 1 148 | |
| - Non-controlling interests | (64) | - | 1 213 | - | - |
| 2022 | 2021 | 2021 | ||
|---|---|---|---|---|
| (NOK 1 000) | Notes | 30. Sept | 30. Sept | 31. Dec |
| unaudited | unaudited | |||
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 121 110 | 127 262 | 120 140 | |
| Goodwill | 196 504 | 195 535 | 187 843 | |
| Total intangible assets | 317 613 | 322 797 | 307 983 | |
| Deferred tax asset | 27 087 | 23 411 | 26 999 | |
| Fixed assets | ||||
| Right-of-use assets | 52 914 | 33 394 | 29 765 | |
| Property, plant and equipment | 32 506 | 30 637 | 29 855 | |
| Total fixed assets | 85 420 | 64 031 | 59 620 | |
| Total non-current assets | 430 120 | 410 239 | 394 601 | |
| Current assets | ||||
| Trade accounts receivable | 178 080 | 139 683 | 141 397 | |
| Customer projects | 3 | 131 478 | 86 586 | 94 799 |
| Other short-term receivables | 52 381 | 31 856 | 19 614 | |
| Cash and cash equivalents | 6 | 94 843 | 168 784 | 176 224 |
| Total current assets | 456 782 | 426 908 | 432 034 | |
| Assets held for sale | 9 | 11 759 | - | - |
| TOTAL ASSETS | 898 661 | 837 148 | 826 635 |
| 2022 | 2021 | 2021 | ||
|---|---|---|---|---|
| (NOK 1 000) | Notes | 30. Sept | 30. Sept | 31. Dec |
| unaudited | unaudited | |||
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Paid-in capital | ||||
| Share capital | 2 159 | 2 184 | 2 185 | |
| Other paid in equity | 9 003 | 1 816 | 3 657 | |
| Share premium | 160 616 | 139 383 | 158 345 | |
| Total paid-in capital | 171 778 | 143 383 | 164 186 | |
| Other equity | (2 253) | 6 328 | 2 855 | |
| Retained earnings | 9 479 | 58 692 | 41 968 | |
| Equity attributable to equity holders of the parent | 179 005 | 208 403 | 209 009 | |
| Non-controlling interest | 1 457 | 0 | 0 | |
| Total equity | 180 462 | 208 403 | 209 009 | |
| Liabilities | ||||
| Non-current liabilities | ||||
| Deferred tax | 25 300 | 27 765 | 26 836 | |
| Interest-bearing loans | 7 | 10 200 | 365 463 | 357 887 |
| Other long-term liabilities | 660 | 12 188 | 3 134 | |
| Lease liabilities | 35 750 | 19 220 | 16 445 | |
| Total long-term liabilities | 71 911 | 424 636 | 404 303 | |
| Current liabilities | ||||
| Trade accounts payable | 17 797 | 13 445 | 18 257 | |
| Customer projects liabilities | 3 | 98 302 | 63 280 | 66 452 |
| Interest-bearing loans | 7 | 369 851 | 1 378 | 1 356 |
| Lease liabilities | 18 844 | 15 174 | 14 423 | |
| Income tax payable | (24) | 4 048 | 2 550 | |
| Public duties payable | 39 403 | 33 628 | 36 113 | |
| Other short-term liabilities | 97 896 | 72 768 | 73 921 | |
| Derivatives | - | 388 | 249 | |
| Total short-term liabilities | 642 069 | 204 108 | 213 322 | |
| Liabilities directly associated with the assets held for sale | 9 | 4 219 | - | - |
| Total liabilities | 718 199 | 628 744 | 617 625 | |
| TOTAL EQUITY AND LIABILITIES | 898 661 | 837 147 | 826 635 |
| 2022 | 2021 | 2022 | 2021 | 2021 | ||
|---|---|---|---|---|---|---|
| (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 | (9 420) | 1 020 | (20 886) | 13 466 | 15 014 | |
| Profit (Loss) before tax from discontinued operation | (5 649) | - | (15 547) | - | - | |
| Net financial items | 5 | 13 776 | 6 729 | 34 884 | 7 647 | 7 571 |
| Share based program | 2 520 | 2 641 | 6 225 | 3 932 | 5 679 | |
| Depreciation and impairments | 671 | 990 | 2 489 | 2 505 | 4 077 | |
| Depreciation right-of-use assets | 4 768 | 4 246 | 13 343 | 12 017 | 16 114 | |
| Amortisation intangible assets | 7 177 | 7 447 | 21 201 | 21 802 | 29 296 | |
| Depreciation implementation costs customer projects | 3 | 7 316 | 7 338 | 22 807 | 21 016 | 29 874 |
| Capitalisation implementation costs customer projects | 3 | (15 089) | (13 010) | (54 428) | (32 952) | (51 350) |
| Customer project revenue deferred | 3 | 12 842 | 8 482 | 48 990 | 28 489 | 41 356 |
| Customer project revenue recognised | 3 | (4 234) | (4 655) | (13 176) | (12 938) | (21 701) |
| Taxes paid | - | - | (9 653) | (1 563) | (4 815) | |
| Changes in accounts receivable | (19 826) | 10 935 | (36 683) | 14 412 | 12 464 | |
| Changes in accounts payable | (4 409) | (3 779) | 14 465 | (8 364) | (3 525) | |
| Changes in other items | 3 723 | (10 126) | -11 699 | (44 974) | (27 581) | |
| Interest received | 68 | 56 | 105 | 86 | 99 | |
| Interest paid | (4 851) | (4 920) | (14 437) | (14 721) | (19 536) | |
| Net cash flow from operating activities | (10 615) | 13 395 | (12 000) | 9 860 | 33 037 | |
| Cash flows to investing activities | ||||||
| Investment in fixed and intangible assets | (8 014) | (8 404) | (18 030) | (14 464) | (20 630) | |
| Investment in fixed and intangible assets business combinations | - | - | (11 317) | - | - | |
| Acquisition of subsidiaries, net of cash acquired | - | (42 492) | - | (42 492) | (43 322) | |
| Net cash flow from investing activities | (8 014) | (50 896) | (29 348) | (56 956) | (63 952) | |
| Cash flows from financing activities | ||||||
| Sale of own shares | - | - | - | - | 7 235 | |
| Buyback of own shares | - | - | (17 768) | 8 188 | (975) | |
| Contribution from minority shareholder | 452 | - | 1 457 | - | ||
| Capital increase (net proceeds) | - | - | - | 115 908 | 115 508 | |
| Payment of lease liabilities | (4 599) | (3 319) | (12 766) | (9 912) | (15 767) | |
| Repayment of loan | (531) | (484) | (4 032) | (1 462) | (1 919) | |
| Dividend payments to owners of the parent | - | - | (7 558) | (19 639) | (19 639) | |
| Net cash flow from financing activities | (4 679) | (3 803) | (40 668) | 93 084 | 84 444 | |
| Net changes in cash and cash equivalents | (23 307) | (41 303) | (82 015) | 45 988 | 53 529 | |
| Net foreign exchange difference | 2 094 | (1 208) | 1 379 | (2 049) | (2 151) | |
| Cash and cash equivalents at the beginning of the period | 116 801 | 211 293 | 176 224 | 124 843 | 124 843 | |
| Cash and cash equivalents at the end of the period | 95 587 | 168 782 | 95 587 | 168 782 | 176 224 |
| Currency | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Share | Share | Other paid in | Total paid-in | Other | Retained | reevaluation | |||
| (NOK 1000) | Note | capital | premium | equity | equity | equity | earnings | reserve | Total equity |
| Equity at 01.01.2021 | 1 962 | 34 250 | 6 655 | 42 868 | 14 267 | 59 788 | (12 564) | 104 359 | |
| Profit of the year | 11 722 | 11 722 | |||||||
| Other comprehensive income | -8 101 | (8 101) | |||||||
| Sale of own shares | 13 | 6 324 | 6 337 | 6 337 | |||||
| Share based payments | 3 932 | 3 932 | 3 932 | ||||||
| Settlement of share based payments | 8 | 1 858 | (8 409) | (6 543) | (6 543) | ||||
| Issue of Share Capital | 202 | 120 537 | 120 739 | 120 739 | |||||
| Transaction costs related to issue of new shares | (3 948) | (3 948) | (3 948) | ||||||
| Other changes | (363) | (363) | 162 | (254) | (456) | ||||
| Dividend | (19 639) | (19 639) | (19 639) | ||||||
| Equity at 30.09.2021 | 2 185 | 139 383 | 1 816 | 143 383 | 6 327 | 71 256 | (12 564) | 208 402 | |
| Unaudited | |||||||||
| Equity at 01.01.2022 | 2 185 | 158 345 | 3 657 | 164 186 | 2 855 | 53 632 | (11 664) | 209 009 | |
| Profit of the year | (26 622) | (26 622) | |||||||
| Other comprehensive income | 16 643 | 1 850 | 18 493 | ||||||
| Purchase of own shares | (35) | (35) | (17 743) | (17 778) | |||||
| Share based payments | 6 225 | 6 225 | 6 225 | ||||||
| Settlement of share based payments | 10 | 2 271 | (2 281) | - | |||||
| Other changes | 1 402 | 1 402 | (5 108) | 2 399 | (1 306) | ||||
| Dividend | - | (7 558) | (7 558) | ||||||
| Equity at 30.09.2022 | 2 160 | 160 616 | 9 003 | 171 778 | (2 253) 20 750 | (9 814) | 180 461 | ||
| 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 three months ended 30 September 2022, 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, 2021.
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 the first quarter of 2022 Zalaris established HR & Payroll Tech Investments as a new segment, following the establishment of vyble GmbH "vyble", and subsequent acquisition of the assets of vyble AG. However, following the restructuring of vyble, the Company has decided to focus its resources entirely on the Managed Services and Professional Services segments, and a sales process has been initiated for vyble, and the asset reclassified to "assets held for sale".
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 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-premise solutions. A large portion of these services are of recurring nature and much of the services are based on long-term customer relationships.
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.
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 ("New business"), 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.
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 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 | Gr.Ovhd & | |||
|---|---|---|---|---|---|
| (NOK 1 000) | Services | Services New business | 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) | (22) | (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 | (1 696) | (25 267) | (6 694) |
| Cash flow from investing activities | (8 014) |
| Managed | Professional | Gr.Ovhd & | |||
|---|---|---|---|---|---|
| (NOK 1 000) | Services | Services New business | Unallocated | Total | |
| Revenue, external | 132 455 | 62 922 | - | - | 195 376 |
| Operating expenses | (106 196) | (56 481) | - | (5 184) | (167 861) |
| EBITDA | 26 259 | 6 440 | - | (5 184) | 27 516 |
| Depreciation and amortisation | (9 883) | (2 322) | - | (7 562) | (19 767) |
| EBIT | 16 376 | 4 118 | - | (12 746) | 7 749 |
| Net financial income/(expenses) | - | (6 729) | (6 729) | ||
| Income tax | - | (357) | (357) | ||
| Profit for the period from continuing operations | 16 376 | 4 118 | - | (19 832) | 663 |
| Cash flow from investing activities | (3 958) |
2022 Jan-Sep
| Managed | Professional | Gr.Ovhd & | |||
|---|---|---|---|---|---|
| (NOK 1 000) | Services | Services New business | 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) | 13 998 |
| Net financial income/(expenses) | - | (34 884) | (34 884) | ||
| Income tax | - | 6 390 | 6 390 | ||
| Profit for the period from continuing operations Cash flow from investing activities |
41 878 | 15 565 | (5 049) | (66 889) | (14 496) (29 348) |
2021 Jan-Sep
| Managed | Professional | Gr.Ovhd & | |||
|---|---|---|---|---|---|
| (NOK 1 000) | Services | Services New business | Unallocated | Total | |
| Revenue, external | 386 671 | 186 899 | - | 573 570 | |
| Operating expenses | (310 260) | (167 302) | (20 204) | (497 766) | |
| EBITDA | 76 411 | 19 597 | - | (20 204) | 75 804 |
| Depreciation and amortisation | (28 531) | (6 409) | - | (19 750) | (54 691) |
| EBIT | 47 880 | 13 188 | - | (39 954) | 21 114 |
| Net financial income/(expenses) | - | - | - | (7 647) | (7 647) |
| Income tax | - | - | - | (1 744) | (1 744) |
| Profit for the period from continuing operations Cash flow from investing activities |
47 880 | 13 188 | - | (49 345) | 11 722 (56 956) |
| (NOK 1 000) | Managed Services |
Professional Services New business |
Gr.Ovhd & Unallocated |
Total | |
|---|---|---|---|---|---|
| Revenue, external | 529 685 | 245 580 | - | - | 775 265 |
| Operating expenses | (428 087) | (218 921) | - | (26 309) | (673 317) |
| EBITDA | 101 598 | 26 658 | - | (26 309) | 101 947 |
| Depreciation and amortisation | (39 598) | (8 717) | - | (31 047) | (79 362) |
| EBIT | 62 000 | 17 941 | - | (57 355) | 22 585 |
| Net financial income/(expenses) | - | - | - | (7 571) | (7 571) |
| Income tax | - | - | - | (2 202) | (2 202) |
| Profit for the period from continuing operations | 62 000 | 17 941 | - | (67 128) | 12 812 |
| Cash flow from investing activities | (63 952) |
The Group's operations are carried in several countries, and information regarding revenue based on geography is provided below. Information is based on location of the entity generating the revenue, which to a large extent, corresponds to the geographical location of the customers.
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Norway | 51 026 | 47 906 | 142 825 | 150 034 | 200 875 |
| Northern Europe ex Norway | 69 396 | 54 305 | 193 823 | 163 377 | 221 047 |
| Central Europe | 89 427 | 82 727 | 271 154 | 229 554 | 314 540 |
| UK & Ireland | 12 129 | 10 438 | 32 195 | 30 605 | 38 803 |
| APAC | 1 587 | - | 2 194 | - | - |
| Total | 223 564 | 195 376 | 642 191 | 573 570 | 775 265 |
The Group's revenue from contracts with customers has been disaggregated and presented in note 2.
| 2022 | 2021 | 2021 | |
|---|---|---|---|
| (NOK 1 000) | 30. Sep | 30. Sep | 31. Dec |
| Trade receivables | 178 080 | 139 683 | 141 397 |
| Customer project assets | 131 478 | 86 586 | 94 799 |
| Customer project liabilities | (98 302) | (63 280) | (66 452) |
| Prepayments from customers | (18 868) | (8 930) | (9 474) |
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 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 comprises 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 become the property of Zalaris and is hence rendered as income by the Group.
| (NOK 1 000) | 2022 | 2021 | 2022 | 2021 | 2021 |
|---|---|---|---|---|---|
| Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | 31. Dec | |
| Opening balance in the period | 119 917 | 80 962 | 94 799 | 78 246 | 78 246 |
| Cost capitalised | 15 088 | 13 010 | 54 428 | 32 952 | 51 350 |
| Amortisation | (7 316) | (7 338) | (22 807) | (21 017) | (29 874) |
| Disposals & currency | 3 790 | (47) | 5 059 | (3 595) | (4 923) |
| Customer projects assets end of period | 131 479 | 86 586 | 131 479 | 86 586 | 94 799 |
| (NOK 1 000) | 2022 | 2021 | 2022 | 2021 | 2021 |
|---|---|---|---|---|---|
| Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec | |
| Opening balance in the period | (94 182) | (60 335) | (66 452) | (50 256) | (50 256) |
| Revenue deferred | (12 842) | (8 482) | (48 990) | (28 490) | (41 356) |
| Revenue recognised | 4 234 | 4 655 | 13 176 | 12 938 | 21 701 |
| Disposals & currency | 4 488 | 882 | 3 964 | 2 527 | 3 458 |
| Customer project liabilities end of period | (98 302) | (63 280) | (98 302) | (63 280) | (66 452) |
| (NOK 1 000) | 2022 Jul-Sep |
2021 Jul-Sep |
2022 Jan-Sep |
2021 Jan-Sep |
2021 Jan-Dec |
|---|---|---|---|---|---|
| Salary | 102 689 | 87 346 | 304 426 | 266 020 | 357 333 |
| Bonus | 4 249 | 4 864 | 11 622 | 13 387 | 19 452 |
| Social security tax | 15 415 | 11 599 | 44 953 | 38 826 | 55 823 |
| Pension costs | 4 882 | 4 911 | 15 414 | 14 002 | 18 480 |
| Share based payments | 2 468 | 2 651 | 6 130 | 3 942 | 5 749 |
| Other personnel expenses | 4 400 | 2 979 | 11 663 | 8 682 | 11 906 |
| Capitalised to internal development projects | (4 343) | (2 610) | (9 240) | (8 153) | (11 444) |
| Capitalised to customer project assets | (9 582) | (13 010) | (41 175) | (32 952) | (51 350) |
| Total personnel expenses | 120 179 | 98 730 | 343 792 | 303 753 | 405 949 |
| (NOK 1 000) | 2022 Jul-Sep |
2021 Jul-Sep |
2022 Jan-Sep |
2021 Jan-Sep |
2021 Jan-Dec |
|---|---|---|---|---|---|
| Interest income on bank accounts and receivables | 66 | 56 | 103 | 86 | 99 |
| Currency gain | 2 311 | 813 | 4 733 | 2 954 | 4 020 |
| Other financial income | 16 | 254 | 334 | 866 | 1 372 |
| Finance income | 2 393 | 1 123 | 5 170 | 3 906 | 5 491 |
| Interest exp. on financial liab. measured at amortised cost Currency loss Interest expense on leasing Other financial expenses Finance expenses |
4 458 50 611 2 756 7 875 |
4 395 2 336 382 1 239 8 353 |
12 958 3 135 1 622 4 655 22 370 |
13 330 4 528 900 3 484 22 243 |
17 625 5 685 1 281 4 440 29 031 |
| Unrealized foreign exchange profit/(loss) | (8 294) | 501 | (17 684) | 10 690 | 15 968 |
| Net financial items | (13 776) | (6 729) | (34 884) | (7 647) | (7 571) |
| 2022 | 2021 | 2021 | |
|---|---|---|---|
| (NOK 1 000) | 30. Sep | 30. Sep | 31. Dec |
| Cash in hand and at bank - unrestricted funds | 89 331 | 163 672 | 170 034 |
| Deposit accounts - guarantee rent obligations - restricted fund | 2 698 | 2 008 | 2 078 |
| Employee withheld taxes - restricted funds | 2 814 | 3 104 | 4 112 |
| Cash and cash equivalents continuing operations | 94 843 | 168 784 | 176 224 |
| Cash discontinued operations | 743 | - | |
| Total cash and cash equivalents | 95 587 | 168 784 | 176 224 |
| 2022 | 2021 | 2021 | |||
|---|---|---|---|---|---|
| (NOK 1 000) | Annual interest | Maturity | 30. Sep | 30. Sep | 31. Dec |
| Bond loan | 3 m Euribor + 4.75% | 28.09.2023 | 368 416 | 351 891 | 346 806 |
| Commerzbank - DE | 1.3% | 31.12.2031 | 11 437 | 13 997 | 11 687 |
| Landesbank Baden-Würtenberg | 2,45% | 31.12.2022 | 198 | 952 | 750 |
| Total interest-bearing loans | 380 051 | 366 840 | 359 244 | ||
| Total long-term interest-bearing loans | 10 200 | 365 463 | 357 887 | ||
| Total short-term interest-bearing loans | 369 851 | 1 378 | 1 356 |
The Company's bond loan of EUR 35 million is listed on the Oslo Stock Exchange. The loan in Commerzbank DE relates to the office building in Leipzig, which is owned by the Company.
During Q3 2022, 10,000 new share options were granted to employees. As of 30 September 2022, there are 2,258,500 share options and 66,299 RSUs outstanding.
In the board meeting on 13 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. The transaction is expected to be completed within a year from this date. At 30 June 2022, vyble was classified as a company held for sale and as a discontinued operation. The business of vyble represented the entirety of the Group's HR & Payroll Tech Investments until the decision of sale was made. With vyble being classified as discontinued operations, the HR & Payroll Tech Investments segment is no longer presented in the segment note. The results of vyble for the year are presented below:
| 2022 | 2022 | |
|---|---|---|
| (NOK 1 000) | Jul-Sep | Jan-Sep |
| Revenue | 293 | 2 800 |
| Expenses | 5 542 | 17 576 |
| Operating income | (5 249) | (14 776) |
| Finance | 400 | 771 |
| Profit/(loss) before tax from discontinued operations | (5 649) | (15 547) |
| Tas benefit/(expense) | 1 243 | 3 420 |
| Profit/(loss) after tax from discontinued operations | (4 406) | (12 127) |
The major classes of assets and liabilities of vyble classified as held for sale as at 30 September are as follows: Assets held for sale
| 2022 | |
|---|---|
| (NOK 1 000) | 30. Sep |
| Goodwill | 2 113 |
| Fixed and intangable assets | 10 027 |
| Other current assets | (1 124) |
| Cash and cash equivalents | 743 |
| Assets held for sale | 11 759 |
| Creditors | 3 384 |
| Deferred tax liability | 835 |
| Liabilities directly associated with assets held for sale | 4 219 |
| Net assets directly associated with disposal group | 7 540 |
The net cash flows incurred by vyble are as follows:
| 2022 | 2022 | |
|---|---|---|
| (NOK 1 000) | Jul-Sep | Jan-Sep |
| Operating | (4 274) | (13 197) |
| Investing | - | (11 317) |
| Net cash (outflow)/inflow | (4 274) | (24 514) |
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.
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| EBITDA | 24 290 | 27 770 | 73 838 | 78 454 | 101 948 |
| Restructuring costs* | - | - | - | 275 | 275 |
| Mergers & Acquisitions | - | 774 | - | 5 849 | 7 677 |
| Settlement of VAT dispute from 2018-2019 | - | - | - | - | 1 844 |
| Cost incurred in establishing AMS centre in Poland | - | - | 1 906 | - | - |
| Share-based payments | 2 520 | 2 641 | 6 225 | 3 932 | 5 723 |
| Depreciation right-of-use assets (IFRS 16 effect) | (4 768) | (4 246) | (13 343) | (12 017) | (16 114) |
| Adjusted EBITDA | 22 041 | 26 939 | 68 625 | 76 493 | 101 353 |
| 2022 | 2021 | 2022 | 2021 | 2021 | |
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| EBIT | 4 356 | 7 749 | 13 998 | 21 114 | 22 585 |
| Restructuring costs* | - | - | - | 275 | 275 |
| Mergers & Acquisitions | - | 774 | - | 5 849 | 7 677 |
| Settlement of VAT dispute from 2018-2019 | - | - | - | - | 1 844 |
| Cost incurred in establishing AMS centre in Poland | - | - | 1 906 | - | - |
| Share-based payments | 2 520 | 2 641 | 6 225 | 3 932 | 5 723 |
| Amortization of excess values on acquisition | 2 873 | 2 974 | 8 822 | 8 176 | 11 469 |
| Adjusted EBIT | 9 749 | 14 138 | 30 951 | 39 346 | 49 574 |
*Relates mainly to redundancy costs/severance pay for employees
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Managed Services - EBIT | 16 458 | 16 376 | 41 878 | 47 880 | 62 000 |
| Settlement of VAT dispute from 2018-2019 | - | - | - | - | 1 844 |
| Cost incurred in establishing AMS centre in Poland | - | - | 1 906 | - | - |
| Share-based payments | 1 073 | 1 137 | 2 334 | 1 829 | 2 595 |
| Managed Services - Adjusted EBIT | 17 531 | 17 513 | 46 118 | 49 708 | 66 440 |
| 2022 | 2021 | 2022 | 2021 | 2021 | |
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Professional Services - EBIT | 3 812 | 4 118 | 15 565 | 13 188 | 17 941 |
| Share-based payments | 413 | 490 | 831 | 604 | 875 |
| Professional Services - Adjusted EBIT | 4 226 | 4 608 | 16 396 | 13 792 | 18 816 |
| *Relates mainly to redundancy costs/severance pay for employees | |||||
| 2022 | 2021 | 2022 | 2021 | 2021 | |
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| New business (APAC) - EBIT | (1 696) | - | (5 049) | - | - |
| New business (APAC) - Adj. EBIT | (1 696) | - | (5 049) | - | - |
| 2022 | 2021 | 2022 | 2021 | 2021 | |
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Group overhead/unallocated - EBIT | (14 217) | (12 746) | (38 396) | (39 954) | (57 355) |
| Restructuring costs* | - | - | - | 275 | 275 |
| Mergers & Acquisitions | - | 774 | - | 5 075 | 7 677 |
| Share-based payments | 1 034 | 1 014 | 3 060 | 1 498 | 2 253 |
| Amortization of excess values on acquisition | 2 873 | 2 974 | 8 822 | 5 202 | 11 469 |
| Group overhead/unallocated - Adjusted EBIT | (10 311) | (7 983) | (26 514) | (27 904) | (35 681) |
*Relates mainly to redundancy costs/severance pay for employees
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 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.
| 2022 | 2021 | 2021 | |
|---|---|---|---|
| (NOK 1 000) | 30. Sep | 30. Sep | 31.Dec |
| Cash and cash equivalents continuing operations | 94 843 | 168 784 | 176 224 |
| Cash and cash equivalents discontinuing operations | 743 | - | - |
| Interest-bearing loans and borrowings - long-term | 10 200 | 365 463 | 357 887 |
| Interest bearing loans and borrowings - short-term | 369 851 | 1 378 | 1 356 |
| Net interest-bearing debt (NIBD) | 284 465 | 198 057 | 183 019 |
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 year revenue using foreign exchange rates consistent with the prior year.
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec | |
| Revenue growth, as reported | 14,4 % | 2,9 % | 12,0 % | -2,6 % | -2,2 % |
| Impact of foreign currency | 3,1 % | 2,2 % | 2,5 % | 2,6 % | 3,2 % |
| Revenue growth, constant currency | 17,5 % | 5,1 % | 14,5 % | 0,0 % | 1,0 % |
| Managed Services revenue growth, as reported | 21,2 % | 3,9 % | 18,7 % | -4,9 % | -2,7 % |
| Adj. for customers moved from MS to PS in Q2 2020 | 0,0 % | 0,0 % | 0,0 % | 2,3 % | 1,2 % |
| Impact of foreign currency | 3,0 % | 1,7 % | 2,5 % | 1,7 % | 2,1 % |
| Managed Services revenue growth, constant currency | 24,2 % | 5,6 % | 21,2 % | -0,9 % | 0,6 % |
| Professional Services revenue growth, as reported | -2,5 % | 0,8 % | -3,1 % | 2,7 % | -1,0 % |
| Adj. for customers moved from MS to PS in Q2 2020 | 0,0 % | 0,0 % | 0,0 % | -5,2 % | -2,6 % |
| Impact of foreign currency | 3,5 % | 3,3 % | 2,6 % | 4,7 % | 5,3 % |
| Professional Services revenue growth, constant currency | 1,0 % | 4,1 % | -0,5 % | 2,2 % | 1,7 % |
Free cash flow represents the cash flow that Zalaris generates after capital investments in the Group's business operations have been made. Free cash flow is defined as operational cash flow.
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Net cash flow from operating activities | (10 615) | 13 395 | (12 000) | 9 860 | 33 037 |
| Investment in fixed and intangible assets | (8 014) | (8 404) | (18 030) | (14 464) | (20 630) |
| Free cash flow | (18 628) | 4 991 | (30 030) | (4 604) | 12 407 |
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 fulltime).
| (NOKm unless otherwise stated) | Q3 2020 | Q4 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | Q1 2022 | Q2 2022 | Q3 2022 |
|---|---|---|---|---|---|---|---|---|---|
| Revenues | 189,7 | 203,5 | 192,8 | 185,4 | 195,4 | 201,7 | 208,4 | 210,2 | 223,6 |
| Revenue growth (YoY) | -0,5 % | -1,3 % | -3,9 % | -6,5 % | 3,0 % | -0,9 % | 8,1 % | 13,4 % | 14,4 % |
| EBITDA adjusted | 27,0 | 29,3 | 25,9 | 23,7 | 26,9 | 24,9 | 27,5 | 19,1 | 22,0 |
| EBITDA margin | 14,2 % | 14,4 % | 13,4 % | 12,8 % | 13,8 % | 12,3 % | 13,2 % | 9,1 % | 9,9 % |
| EBIT adjusted | 13,3 | 15,9 | 13,8 | 11,4 | 14,1 | 10,2 | 14,4 | 6,8 | 9,7 |
| EBIT margin | 7,0 % | 7,8 % | 7,2 % | 6,2 % | 7,2 % | 5,1 % | 6,9 % | 3,2 % | 4,4 % |
| Profit Before Tax | (3,1) | 25,1 | 21,5 | (9,0) | 1,0 | 1,7 | 14,7 | (26,2) | (9,4) |
| Income Tax Expense | 1,4 | (6,2) | (4,1) | 2,6 | (0,4) | (0,3) | (1,5) | 5,2 | 2,7 |
| Net income | (1,8) | 18,9 | 17,4 | (6,4) | 0,7 | 1,3 | 13,2 | (21,0) | (6,7) |
| Profit margin | -0,9 % | 9,3 % | 9,0 % | -3,5 % | 0,3 % | 0,7 % | 6,3 % | -10,0 % | -3,0 % |
| Weighted # of shares outstanding (m) | 19,6 | 19,6 | 19,6 | 20,7 | 21,1 | 21,3 | 21,5 | 21,6 | 21,6 |
| Basic EPS (NOK) | (0,09) | 0,96 | 0,89 | (0,31) | 0,03 | 0,06 | 0,44 | (0,72) | (0,95) |
| Diluted EPS (NOK) | (0,09) | 0,86 | 0,85 | (0,31) | 0,03 | 0,06 | 0,41 | (0,72) | (0,95) |
| Cash flow items | |||||||||
| Cash from operating activities | 13,3 | 16,7 | (0,1) | (3,4) | 13,4 | 23,2 | (4,4) | 3,0 | (10,6) |
| Investments | (5,0) | (2,0) | (2,1) | (4,0) | (8,4) | (6,2) | (4,7) | (5,3) | (8,0) |
| Net changes in cash and cash equi. | (14,0) | 8,1 | (6,6) | 93,9 | (41,3) | 7,5 | (41,3) | (17,4) | (23,3) |
| Cash and cash equivalents end of period | 116,3 | 124,8 | 117,6 | 211,3 | 168,8 | 168,8 | 134,7 | 116,8 | 95,6 |
| Net interest-bearing debt | 280,7 | 252,2 | 242,4 | 154,4 | 198,1 | 183,0 | 212,9 | 254,4 | 284,5 |
| Equity | 108,1 | 104,4 | 110,5 | 207,1 | 208,4 | 207,3 | 189,3 | 181,4 | 179,0 |
| Equity ratio | 14,9 % | 14,4 % | 15,6 % | 25,7 % | 24,9 % | 25,0 % | 23,0 % | 20,8 % | 19,9 % |
+47 928 97 276
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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