Zalaris

Earnings Release • Aug 18, 2016

ZALARIS: 2016 Second Quarter Results and First Half Year

ZALARIS: 2016 Second Quarter Results and First Half Year

Record-strong pipeline, offshoring on track

Zalaris' Q2/16 revenues were up 3.1% to NOK 95

million, with EBIT margin at 7.5%. The company served

more than 200,000 client employees at the end of June

- a key milestone. Stronger pipeline of new

opportunities.

Zalaris, a leading provider of payroll and HR

services, delivered solid results in Q2/16 with

continued growth and stable margins. Sales increased

3.1% to NOK 95.3 million in Q2/16 from Q2/15, with a

corresponding EBIT of NOK 7.1 million (7.5%) for the

period.

"We continued to strengthen our leading position in

the market throughout the first half of 2016. Our

results prove our ability to deliver continued growth

despite a somewhat slower market", says Hans-Petter

Mellerud, Zalaris' CEO and founder.

In Q2, Zalaris finalized agreements for the provision

of payroll cloud services with Scandinavian Airlines

in Sweden and a Leading Electronics Utility Company,

with service deliveries scheduled to start in Q1/17.

In total, this will bring approximately 6,000 new

employees onto our platform already utilized by some

of the largest companies in the Nordic region, Baltics

and Poland. The total number of employees covered by

Zalaris solutions was 5.6% higher in Q2/16 vs

Q2/15.

"Zalaris' operations now serve more than 200,000

employees today, a key milestone for the company.

Interest remains high in Zalaris services,

contributing to an increased pipeline in terms of both

the number of potential deals and annual contract

value", says Hans-Petter Mellerud.

Revenues are shifting towards cloud services in the

quarter, which now represent 6.3% of group revenues

(0.8%). The trend is continuing. While its relative

share is decreasing, HR Outsourcing remains the

largest business segment, accounting for 91% of group

revenues.

"Clients that opt for cloud services solutions for

their HR and payroll needs, are boosting income to

Zalaris' Cloud services segment. This is supporting

our further growth", says Mellerud.

Zalaris' Chennai-based service center provides many

advantages and represented in Q2/16 almost 17% of the

company's total service and support hours. The strong

efforts on the Chennai office support increasing

margins.

"The shift towards increased production in Chennai

continues with full force, and full margin effect is

expected in Q2/17. The realized savings will be

reinvested into improved services and growth-related

activities", Mellerud comments.

Contact

Hans-Petter Mellerud, CEO and founder

Mobile: +47 928 97 276

E-mail: hans-petter.mellerud@zalaris.com

Nina Stemshaug, CFO

Mobile: +47 982 60 394

E-mail: nina.stemshaug@zalaris.com

About Zalaris

Zalaris excels in delivering comprehensive cloud-

based HR and payroll services. The company is

certified as a SAP Business Process Outsourcing

(BPO) Partner and is a leading SAP Human Capital

Management (HCM) and SuccessFactors consulting

partner. Founded in 2000, Zalaris today operates in

Denmark, Estonia, Finland, India, Latvia, Lithuania,

Norway, Poland and Sweden, including local-language

service centers with extensive expertise in HR-

related laws and regulations. Learn more about

Zalaris at www.zalaris.com