2022

Annual Report

Simplify work life. Achieve more.

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Table of Contents

About Zalaris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Letter from the CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Management Team. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Report from the Board of Directors. . . . . . . . . . . . . . . . . . . . . . . 14

Alternative Performance Measures (APMs) . . . . . . . . . . . . . . . . . . 96

Simplify Work Life.

Achieve More.

We simplify HR and payroll

administration and empower

you with useful information so

that you can invest more

in people.

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About Zalaris

Payroll & HR Solutions that enable fully

digital organisations - we simplify HR and

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.

our founding in 2000 and today operate in

the Nordics, Baltics, Poland, Germany, Austria,

Switzerland, France, Spain, India, Ireland, the

UK, Singapore and Australia.

One global IT platform

with local presence

Zalaris is a leading European provider of

models.

Supportinng fully digital processes for payroll

and human capital management targeting

20-30% cost savings.

One common multi-country solution

satisfyinng GDPR requirements combines

with competent resourcces saving complex

customers with local ocmpetence and

language.

1,500,000

300,000+

NOK 893m

and regulations

With expertise in local laws

and regulations, together

with partners

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NorwaySpain PolandDenmarkGermany SingaporeUK Lithuania AustraliaSwedenFrance HungaryFinland Latvia IndiaIreland Estonia

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and services.

technology stack, known as PeopleHub, as

a Software-as-a-Service (SaaS) platform.

Zalaris also provides award winning HR

& payroll administration services, providing

Business-Process-as-a-service (BPaaS) or

Business Process Outsourcing (BPO) as it is

commonly referred.

• The second being Zalaris’ consulting

& advisory, transformation & implementation

and application support. Furthermore, Zalaris

is recognised as an SAP gold partner and an

Oracle partner.

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Hub is a complete HR platform to simplify HR

– all in one place.

• It is a global HCM platform that unifies all

employee data and eases all HR processes.

Maintain accurate company data, make

informed decisions efficiently, and empower

employees with the latest self-service

features, all with the security of stringent data

protection.

• With Zalaris’ award-winning HR & payroll

services, you can reduce back-office

headcount, benefit from significant cost

savings, and focus on your core business

strategies with the assurance that your

HR & payroll administration is in safe hands.

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supporting clients on their SAP HCM & HXM

benefitting from long and trusting

relationships with many of the leading

international organisations who have chosen

SAP as their technology platform of choice.

• As a trusted system implementation

partner, Zalaris’ expert consultants are

highly qualified and focused on only the

very best for our customers. Zalaris are

proud to achieve exceptional customer net

promoter scores that are significantly higher

than the industry average and other

accessing expert resources from around the

globe and achieving their HR technology

and IT strategic objectives.

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Letter from the CEO

In 2022, Zalaris continued its growth journey

ending the year with a revenue of NOK 893

by the end of 2023. Adjusted EBIT excluding

improvement programme is on track. We are

targeting an annualised adjusted EBIT of NOK

100 million by the end of 2023.

Within Managed Services, which includes our

SaaS and Outsourcing division, we delivered

considerably beyond our aspirations for growth.

business mode, where we are able to retain

clients for long periods of time. At the end of the

year we had a backlog of approximately NOK

72 million in Annual Recurring Revenue (ARR)

from new signings. These will go live and be

recognised as revenue over 2023.

In Professional Services, our Consulting division,

we sold NOK 280 million of new projects. This

clients. This demonstrates the long-term nature

All our regions finished the quarter with a

strong pipeline of projects. A number of new

and significant agreements are expected to be

signed in the first quarter of 2023.

In Q3 we launched an EBIT improvement

programme targeting an annualised

results as we moved into 2023. As part of

the plan, our current operating model used in

Germany is being transformed to our Zalaris

4.0 delivery concept, with increased levels of

automation and standardised processes, as well

as utilisation of our near- and offshore delivery

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growing market. And we will deliver significant

results throughout 2023, as this improved

In parallel to the above initiatives, we are

for 10% productivity improvements. Our ongoing

strategic project targeting 100% automated

payroll is a key element to achieve this.

We continue to see some cost inflation and

wage pressure. However, Zalaris is reasonably

protected through contracted price indexation

clauses in the majority of our agreements, and

the ability to shift work to locations with lower

costs.

We are monitoring the situation closely with the

The global market is reacting positively to our

service offerings. Our combined Professional-

and Managed Services capabilities, as well as

our strengthened brand in Germany and the UK,

is supporting our target for Managed Services,

a growing trend, so is outsourcing non-core

business and periphery functions.

Zalaris is well positioned with worldwide

delivery capability and is ready to take on new,

large projects. The aim is to provide a single,

common, fully automated solution covering

all countries where an organisation exists in.

This can save multi-national companies time,

money and resources. The ultimate goal is to

help customers simplify work life and achieve

more through automation, standardisation and

its implications for pay. In some countries these

are now supported, digital-first.

We’re already helping clients access payroll

data in real-time. This helps customers visualise

human resource issues, analyse data sets and

add value. This is where Zalaris can add further

value, is through data analytics. Using our

complex needs.

is the use of mobile phones as digital capture

devices. Increasingly Zalaris can utilise forms

and letters photograhped with a mobile device,

say for sick leave and doctor’s visits. The

digitalisation of personal, paper-based forms will

increasingly happen at pace.

However, right now there are many challenges

facing businesses in these unsettling times

with high inflation, wage hikes and soaring

energy bills. Corporations need to be resilient,

yet agile, disciplined innovation is also crucial.

getting older, they’re in their 50s and 60s. They

will retire soon and are not bring replaced by

a broad pipeline of talent in this sector. It is

therefore imperative that businesses outsource

and automate their payroll and HR in order to

access talent, systems and processes.

17.9 million. The figure last year included net

proceeds from a private placement of shares

amounted to NOK 368.2 million, with a new

Group’s liabilities, investment needs and

operations for the next 12 months.

Zalaris’ consolidated equity amounted to

NOK 163.6 million as of 31 December 2022

compared to NOK 209.0 million at the end of

2021. This corresponds to an equity ratio of

18.1% compared to 25.0% the previous year.

The board and executive management expect

the equity ratio to increase going forward.

This is in line with further improvements

expected in Zalaris’ financial results.

Zalaris has two business segments: Managed

Services and Professional Services.

Managed Services had revenue of NOK

644.8 million in 2022 compared to NOK

23.1% (refer to the APMs section of the annual

changes orders from existing customers. All

key geographical regions contributed to the

increase. The acquisition of ba.se in August

2021, accounted for approximately 5.6% of

the revenue growth year-on-year.

Operating profit for this segment in 2022

was NOK 64.2 million compared to NOK 62.0

million in 2021.

Professional Services had revenue of NOK

243.1 million in 2022 compared to NOK 245.6

Services resources being utilised in new

customer contracts for Managed Services,

whereby the revenue is recorded in reporting

on Managed Services.

Operating profit for this segment in 2022

was NOK 20.0 million compared to NOK 17.9

geographical region, encompassing the Asia-

Services. The region, which is a greenfield

investment, is not classified as a separate

business segment, but is reported separately

until it has reach a sustainable business level,

for information purposes. APAC had a negative

operating profit of NOK 5.7 million in 2022.

In February 2022, Zalaris acquired the

assets of vyble AG, a payroll and HR solution

start-up in Germany. The business is being

operated through a 90% owned subsidiary,

vyble GmbH (“vyble”). vyble has a complete

continued growth of its existing businesses.

The investment in vyble has been reclassified

to assets held for sale and as a discontinued

operation. Vyble had operating loss of NOK

20.6 million in 2022.

Total revenue for 2022 was NOK 149.8 million

compared to NOK 144.1 million in 2021, which

negative NOK 42.0 million in 2021. Zalaris

unrealised currency loss of NOK 15.6 million,

compared to a gain of NOK 16.0 million the

previous year, and a provision for a loan to a

subsidiary, vyble GmbH, of NOK 20.2 million.

Total shareholders’ equity in Zalaris ASA as

of 31 December 2022 was NOK 16.3 million

compared to NOK 96.0 million at the end of

2021, corresponding to 3.1% of total assets

compared to 15.9% at the end of the

previous year.

being in compliance with the incurrence test

in the bond loan agreement.

Act No. 3-3, the Board confirms its belief that

conditions exist for continuing operations

on an estimated long-term profitable growth

The Group is exposed to various risks and

uncertainties of an operational, market and

financial character. Internal controls and risk

management are an integrated part of all

Zalaris’ organisational business processes

and of achieving the Company’s strategic and

financial objectives.

termination of any major contracts by, Zalaris’

major customers could have a material adverse

effect on the Group’s business, results for

operations and financial conditions. In addition,

should any of the Group’s major customers

divest large portions of their operations,

control, the functions outsourced by such

customers may face significant alteration. This

within appropriate timescales. Contracts

could also be implemented poorly and fail

to deliver savings to customers. If the Group

underestimates the cost, complexity or time

required to deliver a contract it may also incur

losses. Such delays or failures may have an

adverse effect on the Group’s business, results

of operations and financial conditions, and on

its reputation as an outsourcing provider.

Zalaris is increasingly exposed to cyber

security-related risks through the nature of

targets for threats, ranging from Zalaris

employees misusing legal accesses, to

external threats beyond the company such as

hackers and others trying to exploit the data

the Group is processing, for financial gain

or collecting of information for other illegal

as well as sensitive and confidential

information. Any unauthorised disclosure

large, financially stable companies with high

credit ratings; thus, the Company considers

the credit risk to be low. The Group invoices

customers monthly and continuously monitors

incoming payments.

Liquidity risk is the risk that the Group will

be unable to meet its financial liabilities as

it matures. Zalaris continuously estimates

the need for cash to pay its liabilities as it

matures, and ensures that cash is available at

all times, both for operational and capitalised

million), which expires end-September 2023.

Subsequent to year end, the loan was repaid

and replaced by a new bond loan of EUR 40

million, which expires end-March 2028.

At the end of 2022, the Group had interest-

bearing debt of NOK 380.6 million compared

bond loan. The Company is therefore exposed

income generated by these subsidiaries. The

Group also has foreign currency-denominated

cash deposits.

The Group provides services in countries

with a different currency than the Norwegian

Krone NOK and is consequently exposed to

any fluctuations in the currency rate between

these currencies and NOK. The Group also has

variable interest rate borrowings and is thus

exposed to interest rate fluctuations. The Group

settles internal transactions on an ongoing basis

adequately handled through preventative

measures. Further details on financial risk,

including the sensitivity analysis required by

IFRS, can be found in note 19 in the financial

statements.

will negatively impact Zalaris’ business as a

customers in managing their employees in a

manner which reduces its potential climate

impact through e.g. automated CO2 tracking

for employees.

Zalaris aspires to achieve sustainable

development by balancing financial results,

value creation, sustainability and corporate

its customers in visualising, driving and

documenting the same. The Company has

issued a separate ESG report for 2022 , which

is available on www.zalaris.com.

either gender can combine their work and

work arrangements to support this objective.

The Company organises programmes to

motivate its employees to stay physically active

while ensuring the availability of healthy food

in our canteens.

Zalaris’ solutions help customers and their

employees track work hours, overtime and

leave with ease through effective mobile

-based solutions. Our workforce planning

solutions are used to secure optimal staffing

over the year – building the foundation for

to work.

Our mobile and portal-based solutions

delivering wholly digital payroll and HR

processes. They also fully support flexible

work arrangements and working from home.

Covid-19 pandemic in 2021 and the first half of

2022 when most of the workforce worked from

scores across all countries.

The long-term business success of Zalaris

depends on our ability to live up to our values

of “Service Excellence, Quality-Focused

Processes and Employees – our key assets.”

Zalaris wants to continuously improve the

quality of its services, while contributing to a

positive working environment for its people.

Zalaris requires an active commitment to, and

accountability for, health and safety from all

• Protecting and striving to improve our

• Setting HS performance objectives,

• Planning for, responding to, and recovering

• Developing services that can help our

• Communicating openly with stakeholders

workplace were reported during 2022.

Pollution of the external environment because

and select solutions, products and methods

that minimise any environmental impact. This is

defines the core principles and ethical

standards that form the basis of how the

Company creates value. The Code applies to

Zalaris ASA and any subsidiary in which Zalaris,

directly or indirectly, owns more than 50% of

the voting shares.

It also applies to members of the board of

directors, managers and other employees,

and those acting on behalf of the Company.

Zalaris requires that the Company’s business

business in Zalaris – and how we shall create

value for our customers, investors, staff and

anyone benefiting from our services.

Company is obliged to report on the principles

and practices of corporate governance. In

addition, the Oslo Stock Exchange requires

an annual statement on compliance with the

Company’s corporate governance policy. This

is in accordance with NUES, the Norwegian

Code of Practice for Corporate Governance (In

Norwegian it’s known as “Norsk anbefaling for

eierstyring og selskapsledelse”), issued by the

Norwegian Corporate Governance Board. It

was most recently revised on 14 October 2021.

annual report.

Zalaris ASA have purchased and maintain

a Directors and Officers Liability Insurance

on behalf of the members of the Board of

Directors and CEO. The insurance additionally

capacity and includes subsidiaries owned

with more than 50%. The insurance policy

protection to Zalaris’ directors, officers and any

in their capacity as such and as a result of an

error, omission or breach of duty.

Subsequent to year end, the Company’s bond

loan of EUR 35 million was repaid and replaced

by a new bond loan of EUR 40 million, which

expires end-March 2028. No other events

have occurred after the balance sheet date

which have had a material effect on the issued

growth, having signed an all-time high level

of new, long-term BPaaS/SaaS contracts

within the Managed Services Division during

the last 18 months. This high activity level

is continuing in 2023, with several new,

large multi-country contracts in the near- to

from expanding the service offering to existing

customers, particularly increasing geographic

Zalaris has been expanding its geographical

established its own subsidiaries in new

countries, a revised expansion strategy is

being implemented using in-country partners,

who will use Zalaris’ PeopleHub solution.

This enables profitable geographic expansion

globally with low and moderately 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

and the recruitment for new employees is

challenging in some markets. Most of our long-

increases. Historically, we have seen an

on operational efficiencies and cost reductions.

The underlying fundamentals remain strong

and Zalaris has entered 2023 with a solid

pipeline of potential new sales in all regions.

If signed, the company will exceed the annual

sales target by 10%.

Oslo, 13 April 2023

Adele Norman Pran

Chair of the Board

Hans Petter Mellerud

Chief Executive Officer

Kenth Eriksson

Board Member

Jan M. Koivurinta

Board Member

Statement by the Board of Directors and the CEO

We hereby confirm that the consolidated

financial statements and the financial

prepared in accordance with applicable

company’s assets, liabilities, financial position,

and results as a whole.

We also hereby declare that the annual report

provides a true and fair view of the financial

performance and position of the Group and

the parent company, as well as a description of

the principal risks and uncertainties facing the

Group and the parent company.

Oslo, 13 April 2023

Adele Norman Pran

Chair of the Board

Erik Langaker

Board Member

Liselotte Hägertz Engstam

Board Member

Hans Petter Mellerud

Chief Executive Officer

Kenth Eriksson

Board Member

Jan M. Koivurinta

Board Member

Financial Statement – Consolidated Group

contains the following documents:

• Consolidated Notes to the Financial Statement

The consolidated financial statements, which have been drawn

up by the Board and management, should be read in relation to

the Annual Report and the independent auditor’s opinion.

agreements. The Group continuously evaluates

commencement date to the earlier of the lease

The Group applies IAS 36 Impairment of Assets

Trade and other receivables are non-derivative

amortised cost using the effective interest rate

calculated by taking into account any discount

representative of customer’s actual default in

hand, deposits with banks and other short-

financial instruments entered into by the Group

that are not designated as hedging instruments

are expensed in the period in which they occur.

when the liabilities are derecognised as well as

profit or loss. This category generally applies to

the contributions have been paid, there are no

shares using the weighted average number of

average number of shares outstanding for the

and restricted stock units (RSUs)) of the Group.

IAS 1 and IFRS Practice Statement 2 and how

Determining recoverable amount requires that

Estimating fair value for share-based payment

expected life of the share option and RSUs or

from both Professional Services and Managed

accounts for more than 10% of the total revenue

APAC has been included in the Professional

Note 3 – Revenue from

Trade receivables are non-interest bearing and