Quarterly Report • Aug 25, 2022
Quarterly Report
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| Q2 HIGHLIGHTS 3 | |
|---|---|
| KEY FIGURES 4 | |
| CEO INSIGHTS 5 | |
| FINANCIAL REVIEW 7 | |
| ALTERNATIVE PERFORMANCE MEASURES (APMS)24 | |
| KEY FIGURES 28 |
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.
*Defined in separate section: Alternative Performance Measure (APMs)
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec |
| Revenue | |||||
| Managed Services | 151 667 | 125 779 | 298 214 | 254 216 | 529 685 |
| Professional Services | 57 950 | 59 636 | 119 843 | 123 978 | 245 580 |
| New business (APAC) | 570 | - | 570 | - | - |
| Total revenue | 210 187 | 185 415 | 418 627 | 378 194 | 775 265 |
| Adjusted EBIT1) | |||||
| Managed Services | 12 355 | 16 438 | 29 308 | 32 197 | 66 440 |
| Professional Services | 5 243 | 3 629 | 12 336 | 9 183 | 18 816 |
| HQ (unallocated costs) | (7 425) | (8 649) | (16 648) | (16 173) | (35 681) |
| Adj. EBIT (ex. APAC) | 10 173 | 11 418 | 24 996 | 25 207 | 49 575 |
| Adj. EBIT margin (ex. APAC) | 4,9 % | 6,2 % | 6,0 % | 6,7 % | 6,4 % |
| New business (APAC) | (3 353) | - | (3 793) | - | - |
| Adj. EBIT | 6 820 | 11 418 | 21 203 | 25 207 | 49 575 |
| Share-based payments | (1 828) | (661) | (3 705) | (1 291) | (5 723) |
| Amortisation excess value on acquisitions | (2 945) | (2 584) | (5 949) | (5 202) | (11 469) |
| Other | (854) | (5 073) | (1 907) | (5 349) | (9 798) |
| EBIT | 1 193 | 3 100 | 9 642 | 13 365 | 22 585 |
| EBIT margin (%) | 0,6 % | 1,7 % | 2,3 % | 3,5 % | 2,9 % |
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec |
| Revenue | 210 187 | 185 415 | 418 627 | 378 193 | 775 265 |
| Growth (YoY) | 13,4 % | -6,5 % | 10,7 % | -51,8% | 4,2 % |
| EBIT | 1 194 | 3 100 | 9 642 | 13 365 | 22 585 |
| Adjusted EBIT1) (ex. APAC) | 10 173 | 11 418 | 24 996 | 25 207 | 49 575 |
| Adjusted EBIT margin (as % of revenue) | 4,9 % | 6,2 % | 6,0 % | 6,7 % | 6,4 % |
| Profit/(loss) for the period | (24 980) | (6 416) | (15 522) | 11 060 | 12 812 |
| Earnings per share (EPS) | (0,72) | (0,31) | (0,75) | 0,52 | 0,60 |
| Total comprehensive income | (3 463) | (137) | (5 020) | 5 043 | 1 148 |
| Free cash flow1) | (2 257) | (7 408) | (11 402) | (9 595) | 12 407 |
| Net interest-bearing debt (NIBD)1) | 254 397 | 154 415 | 254 397 | 154 415 | 183 019 |
1) Defined in separate section Alternative Performance Measure (APMs)
In the first half of 2022 we made significant advances in our ambition for Zalaris to be a leading player in the global market for multi-country payroll. We broadened our geographic footprint to also cover APAC. With our Peoplehub concept we can now serve customers in more than 150+ countries with one common system supported by a comprehensive set of services. Our recent wins, e.g. Mätsa and Yunex, have given us much attention in the advisory community resulting in a solid pipeline of opportunities that have the potential to take us to the next level. Having entered the second half of the year we continue to focus on successfully implementing our newly signed agreements and further industrializing our operations targeting margin improvements and increased scale through the implementation of Zalaris 4.0 for all of our entities.
In Q2, #teamZalaris delivered a quarter with record high revenues of NOK 210.2 million growing 15% in constant currency compared to the second quarter of last year. In addition, we invoiced NOK 17.6 million of deferred revenue, up from NOK 11.4 million last year, to be recognized as ongoing transformation projects go live over the coming quarters.
Our adjusted EBIT, excluding the investment of NOK 3.4 million related to the build-up of APAC operations, was NOK 10.2 million (margin 4.9%) which was down from a margin of 6.2% last year. The temporarily reduced EBIT margin is largely related to frontloading of costs from new hirings needed to serve customers on their way in but not yet productive and recognizing revenue. The engagement margin on existing customers is in fact stable and on a positive trend as our Zalaris 4.0 improvement project advances and some of our contracts in Germany have been renegotiated at higher rates. In the quarter we also had a higher than normal costs related to turnover, and for social gatherings satisfying pent-up demand as work situations normalize post-Covid.
We are devastated about the war in Ukraine. While we have not been directly impacted we continue to monitor the situation. The company has decided to seize using the Z-logo pr other abbreviations of the company name.
Within Managed Services, we continued our streak of signing new long-term customers. We are on track to deliver on our communicated 2022 growth ambitions of selling another 15% of Managed
Services revenue, which will ensure we reach our goal to grow 10% organically through 2023. This also means that our target of being a NOK 1 billion revenue company in 2023 stands firm.
In the quarter we signed a seven-year agreement with StoraEnso, a leading provider of renewable solutions in packaging, biomaterials, wooden construction, and paper, to deliver Payroll and Time Management technology and outsourcing services for their 6,000 employees in Finland. As part of the deal, 19 employees transferred to Zalaris.
Our pipeline of new deals continued to develop positively. A number of large deals advanced to the final stage, being selected as one of two final bidders or entered exclusive negotiations. 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.
Margins on existing customers in both customer segments were stable during the quarter. In Managed Services, our project implementing the Zalaris 4.0 delivery model using more near/offshore and automation in Germany is underway but is at this stage contributing negatively to margins. In addition, we had additional costs onboarding new customers both driven by sub-target productivity in the initial burn-in period and from strengthening our delivery capacity and training new staff before new projects enter production. Except for deals where we take over personnel from the customer (e.g. the Stora Enso contract), we build up capacity in our near- and offshore centres to allow for more work being moved from more expensive onshore operations.
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%.
As communicated in our first quarter report we have been investing in the establishment of local operations in Australia and Singapore, strengthening our position in the fast-growing market for global payroll and to better support large customers that require expansion of their shared service to the APAC region. As an alternative to an expensive acquisition, we established a strong team of experienced people working closely with SAP in the region. Leaving Q2, we have come off to a good start with a significant pipeline. Recently, we signed our first agreement to implement a new cloud-based HR solution for Sealord Inc headquartered in New Zealand.
The new unit has taken on the responsibility of further enhancing Zalaris Global SAP SuccessFactors based packaged solutions that will strengthen the revenue potential for the whole group.
Currently, the APAC initiative has been seen as an investment in market expansion. In our financial statements we separate out the revenue and loss from the unit to make it more visible. We remain very encouraged by the development of the unit so far.
APAC targets positive EBIT from Q3 2022 and a doubling of the current monthly revenue to EUR 225K by Q3 2023.
With the acquisition of the German entity vyble® in the first quarter of 2022, our ambition to become a significant player in the growing market for fully digitised payroll and HR solutions for small and medium-sized businesses. The German SME market segment, including companies with 10-250 employees, has an estimated annual value of EUR 3.2 billion.
In the second quarter, we focused the vyble® strategy on being a SaaS provider and divested the payroll as a service business. Our current offering supports both a direct and a partner-based model. In the partner-based model, we enable service providers like BDO to digitize HR and payroll processes for their customers with sales and onboarding handled by the partner. In the direct model, vyble sell a complete HR and Payroll solution as SaaS to SMEs and support them directly.
Powered with this renewed focus and a revamped website we see increased sales and lead conversion rates in both sales channels.
For 2022 we target a total revenue for vyble® of approx. EUR 450K to grow to EUR 2.5 million run rate and cash-flow positive by the end of 2023. This ambition implies a market share of < 0,1% and as such shows the large potential for vyble® with its scalable SaaS solution in the German market.
With these major changes completed we have engaged an investment bank to divest vyble® and to find a partner that can support funding vyble® to a faster growth trajectory. This will allow Zalaris to focus on core business supporting mid- and large size customers with Peoplehub and SAP based solutions.
As a provider of services that allow customers to focus on core business, streamline their operations, and help them recruit and retain critical talent we believe we will continue benefiting from the current uncertainties and recession-like tendencies in the market. It is in periods like this that outsourcing based delivery models – like ours – 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 second quarter 2022 amounted to NOK 210.2 million (Q2 2021: NOK 185.4 million). The revenue increase was +13.4%. Measured in constant currency the increase was +14.6%.
Compared to the second quarter last year, revenue from new customers and the revenue from ba.se, which was acquired in the third quarter 2021, contributed to the growth, and was only partly offset by customers that did not renew their contracts after the second quarter last year.
During the second quarter, Zalaris signed a sevenyear agreement with major Finish industrial company, Stora Enso, for delivery of Payroll and Time Management technology and outsourcing services for their employees in Finland. This is one of Zalaris' 10 largest contracts to date. The contract started generating revenue in June. Zalaris has signed several other new BPaaS/SaaS contracts within Managed Services ("MS") during the last 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 June 2022, the table below shows the ARR within MS at the end of the second quarter, and how the ARR will increase, when these contracts have been implemented.
Contracted ARR* in MS (NOKm)
* 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 44 million) represents an increase in total annual revenue for Zalaris of +5.4% (when compared to total revenue last twelve months – LTM Q2 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 110.2 million in the second quarter. Adjusted for negative currency effects, the revenue was 6.0% higher than the figure last year of NOK 105.2 million. This was explained by the implementation of new customers, partly offset by non-renewals.
Revenue in the Central Europe region was NOK 88.2 million in the second quarter, compared to NOK 70.3 million last year. An increase of +27.0%, when adjusted for negative currency effects. The revenue was approximately 10% higher when adjusted for the inclusion of bas.se (consolidated from the third quarter 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 +38.3% and -9.8% respectively in local currency compared to last year. Managed Services in Germany grew by +37.5% in the same period.
Revenue in the UK & Ireland region amounted to NOK 11.2 million in the second quarter, compared to NOK 10.0 million in the same quarter last year. There has been increased activity within Manage Services in the region, and revenue from Managed Services has increase significantly. However, as Professional Services resources have been utilized on the implementation of new SaaS contracts (recognised as deferred revenue), this has had a negative impact on revenue in that segment.
The adjusted EBIT, before EBIT from New business (APAC), was NOK 10.2 million for the second quarter (NOK 11.4 million), a decrease of 10.5%. 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. Increased travel and other related costs post Covid-19 were particularly high in the second quarter, also contributing to higher operating expenses.
Several programs have been initiated to improve EBIT, including the transfer of a larger portion of work performed to nearshore and offshore locations with lower costs.
The adjustments made to EBIT were the calculated costs of the Company's share-based payment plan (NOK 1.9 million), amortisation of excess values on acquisitions (NOK 3.0 million), and the one-off costs for establishing an Application Maintenance Services centre for Managed Services in Poland (NOK 0.9m).
The EBIT from New business (APAC) was negative NOK 3.4 million in the second 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 with limited revenue during the second quarter. However, the region is making good progress, and subsequent to quarter end Zalaris signed its first large contract in the region, for the implementation of a HR solution for seafood company, Sealord.
Consolidated EBIT for the quarter was NOK 1.2 million (NOK 3.1 million). The variance from last year is due to the investment in APAC (New business) and higher calculated costs for share-based payments, as well the operational issues noted above.
The Group had net financial expense of NOK 27.4 million for the second quarter (net expense NOK 12.1 million), including an unrealised currency loss of NOK 21.2 million (loss NOK 7.3 million) relating to the EUR 35 million bond loan and other foreign currency denominated balances.
The net loss for the quarter was NOK 25.0 million (loss NOK 6.4 million), after the unrealised currency loss of NOK 21.2 million.
Total comprehensive income amounted to negative NOK 3.5 million (negative NOK 0.1 million), after currency translation differences of NOK 21.5 million (NOK 6.3 million) relating to foreign subsidiaries.
The Managed Services ("MS") segment had revenue of NOK 151.7 million for the second quarter 2022, compared to NOK 125.8 million in the same quarter last year. The increase was +21.7% when adjusted for negative currency effects. The inclusion of ba.se service & consulting GmbH ("ba.se") added NOK 12.0 million (+9.5%), while the remaining increase of +12.2% is mainly due to revenue from new customers that have gone live since the first quarter last year, 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 second quarter was NOK 17.6 million, compared to NOK 11.4 million last year, an increase of 55%.
The EBIT for MS for the second quarter was NOK 10.7 million (NOK 16.1 million). EBIT was negatively impacted by start-up costs and resource build-up for new contracts being implemented.
Revenue in the Professional Service ("PS") segment amounted to NOK 58.0 million for the second quarter 2022, compared to NOK 59.6 million last year. When adjusted for negative currency movements the reduction was approximately 1.5% 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 on the implementation of 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 +38.3% and -9.8% respectively, in local currency.
The EBIT for PS for the second quarter was NOK 4.9 million (NOK 3.6 million). The EBIT was positively impacted by higher customer margins in Germany.
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 0.6 million and negative NOK 3.4 million respectively in the second quarter.
In August, the new region signed its first major contract for the implementation of a HR solution for seafood company, Sealord.
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 investment in vyble has thus been reclassified to assets held for sale and as a discontinued operation.
Zalaris had total assets of NOK 873.7 million as of 30 June 2022, compared to NOK 821.5 million on 31 March 2022.
Cash and cash equivalents were NOK 116.8 million as of 30 June 2022, a decrease of NOK 17.9 million from the end of the previous quarter. The reduction in cash is mainly due to the dividend payment of NOK 7.6 million and the investments (negative results) in vyble and APAC.
Total equity as of 30 June 2022 was NOK 182.3 million, compared to NOK 189.7 million as of 31 March 2022. This corresponds to an equity ratio of 20.8% (23.1%).
The Company holds 540,693 own shares at 31 March 2022.
Net interest-bearing debt (interest-bearing debt less cash and cash equivalents) increased from NOK 212.9 million on 31 March 2022 to NOK 254.4 million on 31 June 2022.
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.
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 in 2022, with several new large multi-country contracts in the 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. Further automation of our delivery processes, and a more optimised use of resources from different Zalaris locations, are key targets for 2022 – hereunder extended use of offshoring. However, the new contracts do require additional resources to handle the payroll processing etc., and the recruitment and on-the-job training for the new personnel may have a negative impact on margins short-term, until the new employees are fully utilized. Zalaris has a target EBIT margin of 10%.
Operating cash flow during the second quarter 2022 was NOK 3.0 million (negative NOK 3.4 million).
Net cash flow from investing activities for the second quarter was negative NOK 6.5 million (negative NOK 4.0 million). The increase was mainly due to the development of the chat box Sally and related projects, which is an investment partly financed through SkatteFunn.
Net cash flow from financing activities for the second quarter was negative NOK 13.9 million (NOK 101.3 million), after dividend payment of NOK 7.6 million and lease payments of NOK 4.3 million. The large cash inflow last year was due to net proceeds from a share issue of NOK 115.9 million.
There have been no events after the balance sheet date, which have had a material effect on the issued accounts.
Based on industry and market research reports, Zalaris' key markets within multi-country payroll and HR outsourcing are expected to grow 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, entered in 2021, and by expanding the service offering to existing customers, as we have done with e.g. Siemens, Tryg and Ericsson.
Zalaris is also expanding its geographical coverage both in Europe and the Asia-Pacific region to strengthen its competitive position in this market.
We are actively pursuing non-organic growth options that can strengthen our position in existing markets, and leverage the scale of our existing organisation, exemplified by the acquisition of ba.se during 2021.
The global macro picture with high inflation, affecting salary levels, increasing interest rates and fear of recession, have so far not impacted our business,
but this is something we are following closely. 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 Zalaris is following the developments closely. Covid-19 may still have some impact short-term, however, the underlying fundamentals remain strong, and Zalaris has entered the second half of 2022 with a solid pipeline of potential new sales in all regions. Zalaris has an annual organic revenue growth target of 10%.
The Board of Directors of Zalaris ASA Oslo, 24 August 2022
| 2022 | 2021 | 2022 | 2021 | 2021 | ||
|---|---|---|---|---|---|---|
| (NOK 1 000) | Notes | Apr-Jun unaudited |
Apr-Jun unaudited |
Jan-Jun unaudited |
Jan-Jun unaudited |
Jan-Dec |
| Revenue | 2 | 210 187 | 185 415 | 418 627 | 378 193 | 775 265 |
| Operating expenses | ||||||
| License costs | 20 647 | 16 188 | 40 416 | 31 763 | 67 481 | |
| Personnel expenses | 4 | 118 864 | 98 961 | 223 614 | 205 023 | 405 949 |
| Other operating expenses | 49 819 | 48 497 | 105 049 | 90 723 | 199 886 | |
| Depreciation and impairments | 719 | 760 | 1 817 | 1 515 | 4 078 | |
| Depreciation right-of-use assets | 4 439 | 3 841 | 8 575 | 7 771 | 16 114 | |
| Amortisation intangible assets | 7 036 | 7 147 | 14 024 | 14 355 | 29 296 | |
| Amortisation implementation costs customer projects | 3 | 7 469 | 6 922 | 15 491 | 13 678 | 29 874 |
| Total operating expenses | 208 993 | 182 316 | 408 985 | 364 828 | 752 679 | |
| Operating profit (EBIT) | 1 194 | 3 100 | 9 642 | 13 365 | 22 585 | |
| Financial items | ||||||
| Financial income | 5 | 1 140 | 1 709 | 2 778 | 2 783 | 5 491 |
| Financial expense | 5 | (7 377) | (6 587) | (14 494) | (13 891) | (29 031) |
| Unrealized foreign exchange gain/(loss) | 5 | (21 160) | (7 260) | (9 391) | 10 189 | 15 968 |
| Net financial items | (27 396) | (12 138) | (21 107) | (918) | (7 571) | |
| Profit before tax from continuing operations | (26 203) | (9 039) | (11 466) | 12 447 | 15 014 | |
| Tax expense | 5 182 | 2 623 | 3 664 | (1 387) | (2 203) | |
| Profit for the period from continuing operations | (21 021) | (6 416) | (7 802) | 11 060 | 12 812 | |
| Profit/(loss) after tax for the year from discontinued operations |
9 | (3 959) | - | (7 721) | - | - |
| Profit for the period | (24 980) | (6 416) | (15 522) | 11 060 | 12 812 | |
| Profit attributable to: - Owners of the parent |
-24 618 | -6 416 | -14 784 | 11 060 | 12 812 | |
| - Non-controlling interests | -361 | 0 | -738 | 0 | 0 | |
| Earnings per share: | ||||||
| Basic earnings per share (NOK) | (0,72) | (0,31) | (0,75) | 0,52 | 0,60 | |
| Diluted earnings per share (NOK) | (0,72) | (0,31) | (0,75) | 0,49 | 0,56 | |
| Earnings per share for continuing operations: | ||||||
| Basic earnings per share (NOK) | (0,38) | - | (0,38) | - | - | |
| Diluted earnings per share (NOK) | (0,38) | - | (0,38) | - | - |
| 2022 | 2021 | 2022 | 2021 | 2021 | |||||
|---|---|---|---|---|---|---|---|---|---|
| (NOK 1 000) | Notes | Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec | |||
| unaudited | unaudited | unaudited | unaudited | ||||||
| Profit for the period | (24 980) | (6 416) | (15 522) | 11 060 | 12 812 | ||||
| Other comprehensive income | |||||||||
| Items that will be reclassified to profit and loss in subsequent periods | |||||||||
| Currency translation differences | 21 517 | 6 279 | 10 502 | (6 017) | (11 664) | ||||
| Total other comprehensive income | 21 517 | 6 279 | 10 502 | (6 017) | (11 664) | ||||
| Total comprehensive income | (3 463) | (137) | (5 020) | 5 043 | 1 148 | ||||
| Total comprehensive income attributable to: | |||||||||
| - Owners of the parent | (4 611) | (137) | (5 792) | 5 043 | 1 148 | ||||
| - Non-controlling interests | 1 148 | - | 772 | - | - |
| 2022 2021 |
2021 | ||
|---|---|---|---|
| (NOK 1 000) | Notes 30. Jun |
30. Jun | 31. Dec |
| unaudited | unaudited | ||
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 120 711 | 112 852 | 120 140 |
| Goodwill | 192 946 | 157 965 | 187 843 |
| Total intangible assets | 313 657 | 270 817 | 307 983 |
| Deferred tax asset | 27 054 | 23 394 | 26 999 |
| Fixed assets | |||
| Right-of-use assets | 52 059 | 18 942 | 29 765 |
| Property, plant and equipment | 31 500 | 30 839 | 29 855 |
| Total fixed assets | 83 559 | 49 781 | 59 620 |
| Total non-current assets | 424 270 | 343 992 | 394 601 |
| Current assets Trade accounts receivable |
158 254 | 145 174 | 141 397 |
| Customer projects | 3 119 914 |
80 962 | 94 799 |
| Other short-term receivables | 41 261 | 23 436 | 19 614 |
| Cash and cash equivalents | 6 115 659 |
211 952 | 176 224 |
| Total current assets | 435 089 | 461 524 | 432 034 |
| Assets held for sale | 9 14 360 |
- - |
|
| TOTAL ASSETS | 873 719 | 805 516 | 826 635 |
| 2022 | 2021 | 2021 | ||
|---|---|---|---|---|
| (NOK 1 000) | Notes | 30. Jun | 30. Jun | 31. Dec |
| unaudited | unaudited | |||
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Paid-in capital | ||||
| Share capital | 2 159 | 2 184 | 2 185 | |
| Other paid in equity | 9 991 | (303) | 3 657 | |
| Share premium | 160 616 | 139 550 | 158 345 | |
| Total paid-in capital | 172 767 | 141 431 | 164 186 | |
| Other equity | (2 151) | 8 411 | 2 855 | |
| Retained earnings | 10 761 | 57 298 | 41 968 | |
| Equity attributable to equity holders of the parent | 181 377 | 207 140 | 209 009 | |
| Non-controlling interest | 1 005 | 0 | 0 | |
| Total equity | 182 382 | 207 140 | 209 009 | |
| Liabilities | ||||
| Non-current liabilities | ||||
| Deferred tax | 25 720 | 22 920 | 26 836 | |
| Interest-bearing loans | 7 | 369 795 | 364 984 | 357 887 |
| Other long-term liabilities | 645 | - | 3 134 | |
| Lease liabilities | 35 326 | 10 115 | 16 445 | |
| Total long-term liabilities | 431 486 | 398 019 | 404 303 | |
| Current liabilities | ||||
| Trade accounts payable | 26 139 | 16 604 | 18 257 | |
| Customer projects liabilities Interest-bearing loans |
3 7 |
94 182 1 401 |
60 335 1 383 |
66 452 1 356 |
| Lease liabilities | 18 200 | 9 759 | 14 423 | |
| Income tax payable | (21) | 3 522 | 2 550 | |
| Public duties payable | 35 734 | 37 961 | 36 113 | |
| Other short-term liabilities | 81 806 | 70 261 | 73 921 | |
| Derivatives | - | 531 | 249 | |
| Total short-term liabilities | 257 441 | 200 357 | 213 322 | |
| Liabilities directly associated with the assets held for sale | 9 | 2 409 | - | - |
| Total liabilities | 691 336 | 598 376 | 617 625 | |
| TOTAL EQUITY AND LIABILITIES | 873 719 | 805 516 | 826 635 |
| (NOK 1 000) Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jan-Dec Notes unaudited unaudited unaudited unaudited Cash Flow from operating activities Profit (Loss) before tax from continued operation (26 202) (9 039) (11 466) 12 446 15 014 Profit (Loss) before tax from discontinued operation (6 137) - (9 898) - - 27 396 12 138 21 108 918 7 571 Net financial items 5 1 828 661 3 705 1 291 5 679 Share based program Depreciation and impairments 719 760 1 818 1 515 4 077 Depreciation right-of-use assets 4 439 3 841 8 575 7 771 16 114 Amortisation intangible assets 6 809 7 147 14 024 14 355 29 296 Depreciation implementation costs customer projects 3 7 469 6 922 15 491 13 678 29 874 Capitalisation implementation costs customer projects (18 222) (11 983) (39 339) (19 942) (51 350) 3 Customer project revenue deferred 17 642 11 385 36 148 20 007 41 356 3 Customer project revenue recognised (4 377) (4 078) (8 942) (8 283) (21 701) 3 Taxes paid (4 007) - (9 653) (1 563) (4 815) Changes in accounts receivable (3 448) (315) (16 857) 3 477 12 464 Changes in accounts payable 22 153 (4 906) 18 874 (4 586) (3 525) Changes in other items (18 081) (11 179) -15 422 (34 848) (27 581) 22 15 37 30 99 Interest received |
|---|
| (4 990) (4 819) (9 586) (9 801) (19 536) Interest paid |
| Net cash flow from operating activities 3 015 (3 450) (1 385) (3 535) 33 037 |
| Cash flows to investing activities |
| Investment in fixed and intangible assets (5 272) (3 958) (10 017) (6 060) (20 630) |
| Investment in fixed and intangible assets business combinations (1 214) - (11 317) - - |
| Acquisition of subsidiaries, net of cash acquired - - - - (43 322) |
| Net cash flow from investing activities (6 486) (3 958) (21 334) (6 060) (63 952) |
| Cash flows from financing activities |
| Sale of own shares - - - 7 235 |
| Buyback of own shares (25) 8 188 (17 768) 8 188 (975) |
| Contribution from minority shareholder 1 005 - 1 005 - |
| Capital increase (net proceeds) - 115 908 - 115 908 115 508 |
| Payment of lease liabilities (4 280) (2 637) (8 166) (6 594) (15 767) |
| Repayment of loan (3 037) (497) (3 501) (978) (1 919) |
| Dividend payments to owners of the parent (7 558) (19 639) (7 558) (19 639) (19 639) |
| Net cash flow from financing activities (13 894) 101 324 (35 989) 96 887 84 444 |
| Net changes in cash and cash equivalents (17 366) 93 916 (58 708) 87 292 53 529 |
| Net foreign exchange difference (538) 473 (715) (184) (2 151) Cash and cash equivalents at the beginning of the period 134 704 117 561 176 224 124 843 124 843 |
| Cash and cash equivalents at the end of the period 116 801 211 950 116 801 211 950 176 224 |
| 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 | 11 059 | 11 059 | |||||||
| Other comprehensive income | (6 485) | 468 | (6 017) | ||||||
| Sale of own shares | 13 | 6 324 | 6 337 | 6 337 | |||||
| Share based payments | 1 291 | 1 291 | 1 291 | ||||||
| Settlement of share based payments | 8 | 1 858 | (8 409) | (6 543) | (6 543) | ||||
| Issue of Share Capital | 201 | 120 537 | 120 738 | 120 738 | |||||
| Transaction costs related to issue of new shares | (3 781) | (3 781) | (3 781) | ||||||
| Other changes | 160 | 160 | 161 | (986) | (665) | ||||
| Dividend | (19 639) | (19 639) | (19 639) | ||||||
| Equity at 30.06.2021 | 2 184 | 139 549 | (302) | 141 431 | 14 428 | 63 376 | (12 096) | 207 139 | |
| 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 | (15 522) | (15 522) | |||||||
| Other comprehensive income | 9 219 | 1 283 | 10 502 | ||||||
| Purchase of own shares | (35) | (35) | (17 743) | (17 778) | |||||
| Share based payments | 3 705 | 3 705 | 3 705 | ||||||
| Settlement of share based payments | 10 | 2 271 | (2 281) | - | |||||
| Other changes | 4 911 | 4 911 | (5 006) | 120 | 25 | ||||
| Dividend | - | (7 558) | (7 558) | ||||||
| Equity at 30.06.2022 | 2 160 | 160 616 | 9 991 | 172 767 | (2 151) 22 147 | (10 380) | 182 382 | ||
| 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 June 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 a 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 | New | Gr.Ovhd & | ||
|---|---|---|---|---|---|
| (NOK 1 000) | Services | Services | business | Unallocated | Total |
| Revenue, external | 151 667 | 57 950 | 570 | - | 210 187 |
| Operating expenses | (130 859) | (50 884) | (3 902) | (3 686) | (189 331) |
| EBITDA | 20 808 | 7 066 | (3 332) | (3 686) | 20 856 |
| Depreciation and amortisation | (10 084) | (2 122) | (20) | (7 436) | (19 662) |
| EBIT | 10 725 | 4 944 | (3 353) | (11 122) | 1 193 |
| Net financial income/(expenses) | (27 396) | (27 396) | |||
| Income tax | 5 182 | 5 182 | |||
| Profit for the period from continuing operations | 10 725 | 4 944 | (3 353) | (33 337) | (21 021) |
| Cash flow from investing activities | (6 486) |
| 2021 Apr-Jun | |||||
|---|---|---|---|---|---|
| Managed | Professional | New | Gr.Ovhd & | ||
| (NOK 1 000) | Services | Services | business | Unallocated | Total |
| Revenue, external | 125 779 | 59 636 | - | - | 185 415 |
| Operating expenses | (100 357) | (54 021) | - | (9 268) | (163 646) |
| EBITDA | 25 422 | 5 615 | - | (9 268) | 21 769 |
| Depreciation and amortisation | (9 297) | (2 036) | - | (7 338) | (18 670) |
| EBIT | 16 126 | 3 579 | - | (16 605) | 3 100 |
| Net financial income/(expenses) | - | (12 138) | (12 138) | ||
| Income tax | - | 2 623 | 2 623 | ||
| Profit for the period from continuing operations | 16 126 | 3 579 | - | (26 121) | (6 416) |
| Cash flow from investing activities | (3 958) |
2022 Jan-Jun
| (NOK 1 000) | Managed Services |
Professional Services |
New business |
Gr.Ovhd & Unallocated |
Total |
|---|---|---|---|---|---|
| Revenue, external | 298 214 | 119 843 | 570 | - | 418 627 |
| Operating expenses | (251 242) | (103 553) | (4 342) | (9 942) | (369 080) |
| EBITDA | 46 972 | 16 290 | (3 772) | (9 942) | 49 547 |
| Depreciation and amortisation | (21 113) | (4 537) | (20) | (14 235) | (39 905) |
| EBIT | 25 859 | 11 753 | (3 793) | (24 177) | 9 641 |
| Net financial income/(expenses) | - | (21 107) | (21 107) | ||
| Income tax | - | 3 664 | 3 664 | ||
| Profit for the period from continuing operations Cash flow from investing activities |
25 859 | 11 753 | (3 793) | (41 621) | (7 802) (21 334) |
2021 Jan-Jun
| Managed | Professional | New | Gr.Ovhd & | ||
|---|---|---|---|---|---|
| (NOK 1 000) | Services | Services | business | Unallocated | Total |
| Revenue, external | 254 215 | 123 978 | - | 378 193 | |
| Operating expenses | (204 064) | (110 821) | (15 020) | (329 905) | |
| EBITDA | 50 151 | 13 157 | - | (15 020) | 48 288 |
| Depreciation and amortisation | (18 647) | (4 087) | - | (12 188) | (34 923) |
| EBIT | 31 504 | 9 070 | - | (27 208) | 13 365 |
| Net financial income/(expenses) | - | - | - | (918) | (918) |
| Income tax | - | - | - | (1 387) | (1 387) |
| Profit for the period from continuing operations Cash flow from investing activities |
31 504 | 9 070 | - | (29 513) | 11 060 (6 060) |
| Managed | Professional | Gr.Ovhd & | |||
|---|---|---|---|---|---|
| (NOK 1 000) | Services | Services New business | 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.
Revenue from external customers attributable to
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec |
| Norway | 45 430 | 51 542 | 91 799 | 102 126 | 200 875 |
| Northern Europe ex Norway | 64 728 | 53 641 | 124 466 | 109 072 | 221 047 |
| Central Europe | 88 228 | 70 278 | 181 726 | 146 827 | 314 540 |
| UK & Ireland | 11 231 | 9 954 | 20 066 | 20 167 | 38 803 |
| APAC | 570 | - | 570 | - | - |
| Total | 210 187 | 185 415 | 418 627 | 378 193 | 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. Jun | 30. Jun | 31. Dec |
| Trade receivables | 158 254 | 145 174 | 141 397 |
| Customer project assets | 119 914 | 80 962 | 94 799 |
| Customer project liabilities | (94 182) | (60 335) | (66 452) |
| Prepayments from customers | (14 241) | (9 658) | (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 |
|---|---|---|---|---|---|
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | 31. Dec | |
| Opening balance in the period | 106 435 | 74 731 | 94 799 | 78 246 | 78 246 |
| Cost capitalised | 18 222 | 11 983 | 39 339 | 19 942 | 51 350 |
| Amortisation | (7 444) | (6 923) | (15 491) | (13 679) | (29 874) |
| Disposals & currency | 2 704 | 1 171 | 1 269 | (3 548) | (4 923) |
| Customer projects assets end of period | 119 917 | 80 962 | 119 917 | 80 962 | 94 799 |
| (NOK 1 000) | 2022 | 2021 | 2022 | 2021 | 2021 |
|---|---|---|---|---|---|
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec | |
| Opening balance in the period | (78 052) | (53 134) | (66 452) | (50 256) | (50 256) |
| Revenue deferred | (17 642) | (11 385) | (36 148) | (20 007) | (41 356) |
| Revenue recognised | 4 377 | 4 078 | 8 942 | 8 283 | 21 701 |
| Disposals & currency | (2 865) | 106 | (524) | 1 645 | 3 458 |
| Customer project liabilities end of period | (94 182) | (60 335) | (94 182) | (60 335) | (66 452) |
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec |
| Salary | 100 744 | 88 198 | 201 737 | 178 673 | 357 333 |
| Bonus | 2 251 | 5 363 | 7 373 | 8 523 | 19 452 |
| Social security tax | 13 742 | 12 323 | 29 538 | 27 226 | 55 823 |
| Pension costs | 6 004 | 4 595 | 10 531 | 9 090 | 18 480 |
| Share based payments | 1 773 | 276 | 3 662 | 907 | 5 749 |
| Other personnel expenses | 3 612 | 3 100 | 7 263 | 6 088 | 11 906 |
| Capitalised to internal development projects | (1 361) | (2 912) | (4 898) | (5 543) | (11 444) |
| Capitalised to customer project assets | (7 900) | (11 982) | (31 592) | (19 941) | (51 350) |
| Total personnel expenses | 118 864 | 98 961 | 223 614 | 205 023 | 405 949 |
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec |
| Interest income on bank accounts and receivables | 22 | 15 | 37 | 30 | 99 |
| Currency gain | 990 | 1 341 | 2 422 | 2 141 | 4 020 |
| Other financial income | 129 | 353 | 319 | 612 | 1 372 |
| Finance income | 1 140 | 1 709 | 2 778 | 2 783 | 5 491 |
| Interest exp. on financial liab. measured at amortised cost | 4 487 | 4 411 | 8 500 | 8 935 | 17 625 |
| Currency loss | 1 508 | 819 | 3 084 | 2 192 | 5 685 |
| Interest expense on leasing | 564 | 255 | 1 011 | 518 | 1 281 |
| Other financial expenses | 816 | 1 102 | 1 899 | 2 245 | 4 440 |
| Finance expenses | 7 376 | 6 587 | 14 494 | 13 890 | 29 031 |
| Unrealized foreign exchange profit/(loss) | (21 160) | (7 260) | (9 391) | 10 189 | 15 968 |
| Net financial items | (27 396) | (12 138) | (21 107) | (918) | (7 571) |
| 2022 | 2021 | 2021 | |
|---|---|---|---|
| (NOK 1 000) | 30. Jun | 30. Jun | 31. Dec |
| Cash in hand and at bank - unrestricted funds | 109 792 | 206 762 | 170 034 |
| Deposit accounts - guarantee rent obligations - restricted funds | 2 698 | 2 083 | 2 078 |
| Employee withheld taxes - restricted funds | 3 169 | 3 107 | 4 112 |
| Cash and cash equivalents continuing operations | 115 659 | 211 952 | 176 224 |
| Cash discontined operation | 1 141 | - | - |
| Total cash and cash equivalents | 116 799 | 211 952 | 176 224 |
| 2022 | 2021 | 2021 | |||
|---|---|---|---|---|---|
| (NOK 1 000) | Annual interest | Maturity | 30. Jun | 30. Jun | 31. Dec |
| Bond loan | 3 m Euribor + 4.75% | 28.09.2023 | 359 337 | 352 710 | 346 806 |
| Commerzbank - DE | 1.3% | 31.12.2031 | 11 472 | 12 510 | 11 687 |
| Landesbank Baden-Würtenberg | 2,45% | 31.12.2022 | 387 | 1 147 | 750 |
| Total interest-bearing loans | 371 196 | 366 367 | 359 244 | ||
| Total long-term interest-bearing loans | 369 795 | 364 984 | 357 887 | ||
| Total short-term interest-bearing loans | 1 401 | 1 383 | 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 Q2 2022, 800,000 new share options were granted to employees. As of 30 June 2022, there are 2,273,500 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) | Apr-Jun | Jan-Jun |
| Revenue | 1 296 | 2 507 |
| Expenses | 7 063 | 12 034 |
| Operating income | (5 767) | (9 528) |
| Finance | 370 | 371 |
| Profit/(loss) before tax from discontinued operations | (6 137) | (9 899) |
| Tas benefit/(expense) | 2 178 | 2 178 |
| Profit/(loss) before tax from discontinued operations | (3 959) | (7 721) |
The major classes of assets and liabilities of vyble classified as held for sale as at 30 June are as follows:
| 2022 | |
|---|---|
| (NOK 1 000) | 30. Jun |
| Goodwill | 2 113 |
| Fixed and intangable assets | 9 316 |
| Other current assets | 1 791 |
| Cash and cash equivalents | 1 141 |
| Assets held for sale | 14 360 |
| Creditors | 1 574 |
| Deferred tax liability | 835 |
| Liabilities directly associated with assets held for sale | 2 409 |
| Net assets directly associated with disposal group | 11 951 |
The net cash flows incurred by vyble are as follows:
| 2022 | 2022 | |
|---|---|---|
| (NOK 1 000) | Apr-Jun | Jan-Jun |
| Operating | (4 330) | (18 196) |
| Investing | - | (2 045) |
| Net cash (outflow)/inflow | (4 330) | (20 241) |
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) | Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec |
| EBITDA | 20 857 | 21 769 | 49 548 | 50 684 | 101 948 |
| Restructuring costs* | - | - | - | 275 | 275 |
| Mergers & Acquisitions | - | 5 075 | - | 5 075 | 7 677 |
| Settlement of VAT dispute from 2018-2019 | - | - | - | - | 1 844 |
| Cost incurred in establishing AMS centre in Poland | 853 | - | 1 906 | - | - |
| Share-based payments | 1 828 | 661 | 3 705 | 1 291 | 5 723 |
| Depreciation right-of-use assets (IFRS 16 effect) | (4 439) | (3 841) | (8 575) | (7 771) | (16 114) |
| Adjusted EBITDA | 19 099 | 23 664 | 46 584 | 49 554 | 101 353 |
| 2022 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|
| (NOK 1 000) | Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec |
| EBIT | 1 194 | 3 100 | 9 642 | 13 365 | 22 585 |
| Restructuring costs* | - | - | - | 275 | 275 |
| Mergers & Acquisitions | - | 5 075 | - | 5 075 | 7 677 |
| Settlement of VAT dispute from 2018-2019 | - | - | - | - | 1 844 |
| Cost incurred in establishing AMS centre in Poland | 853 | - | 1 906 | - | - |
| Share-based payments | 1 828 | 661 | 3 705 | 1 291 | 5 723 |
| Amortization of excess values on acquisition | 2 945 | 2 584 | 5 949 | 5 202 | 11 469 |
| Adjusted EBIT | 6 820 | 11 419 | 21 201 | 25 208 | 49 574 |
*Relates mainly to redundancy costs/severance pay for employees
| 2022 | 2021 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|---|
| (NOK 1 000) | Apr-Jun | Apr-Jun | Oct-Dec | Jan-Jun | Jan-Jun | Jan-Dec |
| Managed Services - EBIT | 10 725 | 16 126 | - | 25 859 | 31 504 | 62 000 |
| Settlement of VAT dispute from 2018-2019 | - | - | 1 844 | - | - | 1 844 |
| Cost incurred in establishing AMS centre in Poland | 853 | - | - | 1 906 | - | - |
| Share-based payments | 777 | 312 | 465 | 1 541 | 694 | 2 595 |
| Managed Services - Adjusted EBIT | 12 355 | 16 438 | 2 309 | 29 307 | 32 197 | 66 440 |
| 2022 | 2021 | 2021 | 2022 | 2021 | 2021 | |
| (NOK 1 000) | ||||||
| Apr-Jun 4 944 |
Apr-Jun 3 579 |
Oct-Dec - |
Jan-Jun 11 753 |
Jan-Jun 9 070 |
Jan-Dec 17 941 |
|
| Professional Services - EBIT Share-based payments |
299 | 49 | 108 | 583 | 114 | 875 |
| Professional Services - Adjusted EBIT | 5 243 | 3 629 | 108 | 12 336 | 9 183 | 18 816 |
| 2022 | 2021 | 2021 | 2022 | 2021 | 2021 | |
|---|---|---|---|---|---|---|
| (NOK 1 000) | Apr-Jun | Apr-Jun | Oct-Dec | Jan-Jun | Jan-Jun | Jan-Dec |
| Group overhead/unallocated - EBIT | (11 122) | (16 605) | - | (24 177) | (27 208) | (57 355) |
| Restructuring costs* | - | - | - | - | 275 | 275 |
| Mergers & Acquisitions | - | 5 075 | 1 829 | - | 5 075 | 7 677 |
| Share-based payments | 752 | 298 | 1 218 | 1 580 | 484 | 2 253 |
| Amortization of excess values on acquisition | 2 945 | 2 584 | 3 293 | 5 949 | 5 202 | 11 469 |
| Group overhead/unallocated - Adjusted EBIT | (7 425) | (8 649) | 6 340 | (16 648) | (16 173) | (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. Jun | 30. Jun | 31. Dec |
| Cash and cash equivalents continuing operations | 115 659 | 211 952 | 176 224 |
| Cash and cash equivalents discontinuing operations | 1 141 | - | - |
| Interest-bearing loans and borrowings - long-term | 369 795 | 364 984 | 357 887 |
| Interest bearing loans and borrowings - short-term | 1 401 | 1 383 | 1 356 |
| Net interest-bearing debt (NIBD) | 254 397 | 154 415 | 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 | |
|---|---|---|---|---|---|
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec | |
| Revenue growth, as reported | 13,4 % | -6,5 % | 10,7 % | -5,2 % | -2,2 % |
| Impact of foreign currency | 1,2 % | 5,4 % | 2,2 % | 2,9 % | 3,2 % |
| Revenue growth, constant currency | 14,6 % | -1,1 % | 12,9 % | -2,3 % | 1,0 % |
| Managed Services revenue growth, as reported | 20,5 % | -8,2 % | 17,3 % | -9,0 % | -2,7 % |
| Adj. for customers moved from MS to PS in Q2 2020 | 0,0 % | 2,8 % | 0,0 % | 3,4 % | 1,2 % |
| Impact of foreign currency | 1,2 % | 4,0 % | 2,3 % | 1,8 % | 2,1 % |
| Managed Services revenue growth, constant currency | 21,7 % | -1,4 % | 19,6 % | -3,8 % | 0,6 % |
| Professional Services revenue growth, as reported | -2,5 % | -2,8 % | -3,3 % | 3,7 % | -1,0 % |
| Adj. for customers moved from MS to PS in Q2 2020 | 0,0 % | -6,2 % | 0,0 % | -7,9 % | -2,6 % |
| Impact of foreign currency | 1,0 % | 8,6 % | 2,1 % | 5,4 % | 5,3 % |
| Professional Services revenue growth, constant currency | -1,5 % | -0,4 % | -1,2 % | 1,2 % | 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) | Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec |
| Net cash flow from operating activities | 3 015 | (3 450) | (1 385) | (3 535) | 33 037 |
| Investment in fixed and intangible assets | (5 272) | (3 958) | (10 017) | (6 060) | (20 630) |
| Free cash flow | (2 257) | (7 408) | (11 402) | (9 595) | 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).
We confirm, to the best of our knowledge, that the condensed set of financial statements for the period from 1 January to 30 June 2022 has been prepared in accordance with IAS 34 – Interim Financial Reporting, and gives a true and fair view of the Group's assets, liabilities, financial position and profit or loss as a whole. We also confirm, to the best of our knowledge, that the interim management report includes a fair review of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, a description of the principal risks and uncertainties for the remaining six months of the financial year, and major related parties transactions.
Oslo, 24 August 2022 The Board of Directors of Zalaris ASA
____________________________ ____________________________
____________________________ ____________________________
sign. sign.
Adele Norman Pran Liselotte Hägertz Engstam
sign. sign.
Erik Langaker Kenth Eriksson
Jan Koivurinta sign.
____________________________
| (NOKm unless otherwise stated) | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | Q1 2022 | Q2 2022 |
|---|---|---|---|---|---|---|---|---|---|
| Revenues | 198,4 | 189,7 | 203,5 | 192,8 | 185,4 | 195,4 | 201,7 | 208,4 | 210,2 |
| Revenue growth (YoY) | 5,8 % | -0,5 % | -1,3 % | -3,9 % | -6,5 % | 3,0 % | -0,9 % | 8,1 % | 13,4 % |
| EBITDA adjusted | 26,8 | 27,0 | 29,3 | 25,9 | 23,7 | 26,9 | 24,9 | 27,5 | 19,1 |
| EBITDA margin | 13,5 % | 14,2 % | 14,4 % | 13,4 % | 12,8 % | 13,8 % | 12,3 % | 13,2 % | 9,1 % |
| EBIT adjusted | 12,7 | 13,3 | 15,9 | 13,8 | 11,4 | 14,1 | 10,2 | 14,4 | 6,8 |
| EBIT margin | 6,4 % | 7,0 % | 7,8 % | 7,2 % | 6,2 % | 7,2 % | 5,1 % | 6,9 % | 3,2 % |
| Profit Before Tax | 27,2 | (3,1) | 25,1 | 21,5 | (9,0) | 1,0 | 1,6 | 14,7 | (26,2) |
| Income Tax Expense | (4,7) | 1,4 | (6,2) | (4,1) | 2,6 | (0,4) | (0,3) | (1,5) | 5,2 |
| Net income | 22,4 | (1,8) | 18,9 | 17,4 | (6,4) | 0,7 | 1,2 | 13,2 | (21,0) |
| Profit margin | 11,3 % | -0,9 % | 9,3 % | 9,0 % | -3,5 % | 0,3 % | 0,6 % | 6,3 % | -10,0 % |
| Weighted # of shares outstanding (m) | 19,6 | 19,6 | 19,6 | 19,6 | 20,7 | 21,1 | 21,3 | 21,5 | 21,6 |
| Basic EPS (NOK) | 1,14 | (0,09) | 0,96 | 0,89 | (0,31) | 0,03 | 0,06 | 0,44 | (0,72) |
| Diluted EPS (NOK) | 1,11 | (0,09) | 0,86 | 0,85 | (0,31) | 0,03 | 0,06 | 0,41 | (0,72) |
| Cash flow items | |||||||||
| Cash from operating activities | 45,4 | 13,3 | 16,7 | (0,1) | (3,4) | 13,4 | 23,2 | (4,4) | 3,0 |
| Investments | (3,6) | (5,0) | (2,0) | (2,1) | (4,0) | (8,4) | (6,2) | (4,7) | (5,3) |
| Net changes in cash and cash equi. | 41,0 | (14,0) | 8,1 | (6,6) | 93,9 | (41,3) | 7,5 | (41,3) | (17,4) |
| Cash and cash equivalents end of perio | 129,0 | 116,3 | 124,8 | 117,6 | 211,3 | 168,8 | 176,2 | 134,7 | 116,8 |
| Net interest-bearing debt | 277,9 | 280,7 | 252,2 | 242,4 | 154,4 | 198,1 | 183,0 | 212,9 | 255,5 |
| Equity | 101,5 | 108,1 | 104,4 | 110,5 | 207,1 | 208,4 | 207,3 | 189,3 | 181,4 |
| Equity ratio | 13,5 % | 14,9 % | 14,4 % | 15,6 % | 25,7 % | 24,9 % | 25,0 % | 23,0 % | 20,8 % |
| ROE | -36,9 % | -31,4 % | -8,8 % | 53,7 % | 21,2 % | 19,4 % | 7,0 % | 4,3 % | -3,0 % |
[email protected] +47 928 97 276
Q3 2022 to be published on 26 October, 2022
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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