Growth in sales and sharp rise in operational profitability in both divisions

Group sales of € 245.3 million sustained by increased recurring revenue
Proposed dividend of € 0.63 per share. Up 15% from 2013

Goods ID: confirmation of return to growth and significant improvement in operating performance
Sales of € 190.6 million boosted by key solutions (+11.4% vs. 2013)
Current EBITDA of € 12.1 million (+33.4% vs. 2013)

People ID: clear growth in sales and structural improvement in performance
Sales of € 54.6 million (+35.6% vs. 2013)
Current EBITDA of € 10.6 million (+37.4% vs. 2013)

Sales amounted to € 245.3 million (vs. € 211.5 million in 2013) and current EBITDA to € 19.2 million (€ 13.5 million in 2013).

The Goods ID Division had a very good year, with confirmation of a return to – organic – sales growth and a marked improvement in results. Management is pressing ahead with the implementation of the strategy based on the sale of the 6 specialized Goods ID solutions, positioning its offer clearly and presenting its added value to customers.

The People ID Division has also seen its sales increase, on the back of major commercial successes for short-term projects (delivery of electoral enrolment kits, AFIS) and execution of long-term contracts (Build and Operate). The launch of two contracts in 2014 increases the company’s confidence in growth expectations for this sector.

Cash flow from P&L amounted to € 14.4 million, a significant increase from 2013 (€ 10.3 million). Investments stood at € 8.6 million, having reached € 10.7 million in 2013. This was related to the development work in Goods ID and the preparation of the new long-term contracts in People ID. Allowing for share buybacks and dividend payments in 2014 (€ 3.8 million in total), cash flow improved by € 5.6 million.

Based on the company’s confidence in its performance in 2015, Zetes will be proposing to the General Meeting an ordinary dividend of € 0.63 per share, compared with € 0.55 for the 2013 financial year.


Group sales were up by 16.0% compared with 2013 and current EBITDA up by 41.9%, reflecting the positive performance of the two divisions.

The Goods ID Division significantly improved its performance: sales (+11.4%) reached a historically high level of € 190.6 million. This performance is all the more remarkable since it is organic.

For the People ID Division, the year contained a good mix of short and long-term products, leading to strong growth and excellent results.

Overall, the Group’s current EBITDA performance improved by 41.9%, standing at € 19.2 million (€ 13.5 million in 2013).

The good performance in the first half of 2014 continued in the second. Group current EBITDA (€ 11.1 million) rose again, compared with both the first half of 2014 (€ 8.1 million) and the second half of 2013 (also € 8.1 million).

Finally, net current profit reached € 6.9 million, with a net profit of € 6.2 million (+82.4% compared with 2013).

1.Goods ID

2013 ended overall on a high note, and this trend continued throughout 2014. Order-taking was good, with a high level of customer interest in the Group’s solutions. Apart from the retail sector, which is historically very important for Zetes, the postal services and logistics sectors also demonstrated a marked interest in mobility solutions. Growth was spread over most European countries and supported by a handful of major projects in Belgium, the UK, Switzerland and Germany, especially for the retail sector. These projects explain the decrease in the Gross Margin/Sales ratio as a lower margin traditionally applies to major deliveries of equipment. The Gross Margin increased significantly in absolute terms. Several major contracts were only partially executed in 2014 and will continue to affect the division’s performance in 2015. In absolute terms, the division achieved a historically high level of current EBITDA for H2 2014.

Zetes’ specialization in its six key solutions and unique service offer (life cycle management) for multinationals enables it to stand out and counteract the impact of the erosion of margins on mobile devices. This erosion is due to the concentration of equipment manufacturers and competition for consumer mobile devices, which are more fragile but also more affordable. Cost control coupled with internal productivity gains enabled Zetes to improve its performance once again.

Generally speaking, interest in these six key solutions remains strong, especially for the mobility platform on which the various “business” applications run.

The current EBITDA/sales ratio increased by 1.1% from 5.3% in 2013 to 6.4% in 2014. As a reminder, this ratio stood at 4.3% in 2012.

Changes in exchange rates had little impact on the division overall. Unfavourable exchange rate movements between the South African rand and the euro were offset by favourable movements of sterling against the euro. At constant exchange rates, sales and Gross Margin both increased by 0.2%. The impact on current EBITDA was in the order of € 0,1 million.

In 2014, as in 2013, there was no significant change in consolidation scope. The only acquisition involved the purchase of the assets and integration of the staff – 12 people – of Rodata (Vienna) during the second quarter. The division’s attention remains focussed on the implementation of the strategy of 6 flagship solutions, generating organic growth.

2.People ID

Following the taking of orders in 2013 for long-term contracts in Belgium (passports), Senegal (biometric visas) and Gambia (passports), and preparations for their execution, all of these contracts generated revenue in 2014. Zetes also benefited from successful business development activities, with the delivery of a large batch of biometric registration kits to the Electoral Commission in Uganda (first half 2014) and the preparation of the register of electors in Togo (second half 2014 and first half 2015).

Unsurprisingly, gross margin as a percentage of sales was down because electoral projects, with their high hardware component, give a lower gross margin than long-term contracts. However, in absolute terms, gross margin increased significantly to € 28.8 million (+24.7%). Operating expenses were up 18.3% for carrying out long-term contracts.

The People ID Division aims to remain abreast of market opportunities as well as benefiting from good geographic diversification and a good mix of long and short-term contracts.

The launch of contracts for e-passports in Belgium (May 2014) and Gambia (December 2014) went as planned. They will generate revenue for the next 5 years at least. Under these “Build and Operate” contracts, Zetes has to invest in IT and industrial development and infrastructure. The Company then receives a fee whenever a document is issued throughout the lifetime of the contract. These new contracts, and the contracts for biometric visas for Senegal and Côte d'Ivoire, structurally increase the division’s visibility for future business.

The breakdown by half year reveals the impact of the different types of contract executed on the division’s revenue. Although sales declined significantly in the second half, gross margin was down only € 0.3 million in absolute terms. These phenomena are due to the impact of low-margin sales (supply of hardware) on the first half and the surge in long-term contracts, especially the launch of personalization of Belgian passports in May 2014 (100% of impact on the second half). Current EBITDA as a percentage of sales rose above 20% in the second half (19.3% for the year), in line with the types of contract performed.


The costs of the Corporate Division amounted to € 3.7 million (+7.5% compared with 2013). Its tasks remain strategy definition, financial control, marketing and external growth.

Group sales revenue amounted to over € 245 million. Recurring revenue continues to grow, sustained by the offer of “rental” solutions, maintenance contracts and sale of consumables in Goods ID. In People ID, the importance of long-term contracts continued to increase in 2014. Overall, this recurring revenue covers about 40% of consolidated sales revenue.

Non-recurring charges amounted to a net € 1 million (€ 0.8 million in 2013). They relate mainly to restructuring in Goods ID to align the division with its software strategy.

Depreciation on non-current assets amounted to € 5.5 million, an increase from 2013 (€ 4.9 million). This increase relates entirely to the surge in long-term contracts in People ID. Write-downs on inventory (€ 0.4 million) and receivables (€ 0.1 million) are in line with last year’s figures. Amortization of product development costs amounted to € 2.3 million, a significant increase from 2013 (€ 1.7 million). These development costs are amortized over 3 years and the increase reflects the efforts made by the Group in the last few years.

EBIT amounted to € 9.8 million (€ 5.1 million in 2013), with 65% being generated in the second half.

The net financial result is composed of bank charges (€ 0.3 million, cross-border payments and various guarantees such as bid or performance bonds, along with bank charges linked to investment finance), the foreign exchange result (€ 0.1 million) and finally interest expense (€ 0.2 million).

The effective tax rate was 33.0%, giving a total tax charge of € 3.1 million. Finally, net profit was € 6.2 million, up 82.4% on 2013.

The net current result per share is € 1.34 (€ 0.78 in 2013).


In Goods ID, investments mainly relate to the development of “Group” solutions and equipment leased to customers, whereas in People ID they mainly relate to production infrastructure. These investments continue to have a significant impact on the Group’s balance sheet.

Inventories are up in the Goods ID Division (+ € 2.1 million), almost entirely due to a handful of major roll-outs in progress involving equipment allocated to orders. Compared with 2013, trade and other current receivables are also up (+ € 9.6 million), as are advance payments (+ € 2.5 million). This increase relates to long-term projects in People ID (€ 2.2 million) along with the increase in and acceleration of sales during the last quarter in Goods ID. Regular monitoring is carried out in the form of accounts receivable aging, without observing any significant difference in payment experience.

As expected, the account containing construction contracts is down (€ 0.3 million). This account ensures consistent profitability over time for the various long-term contracts.

The good performance in 2014 has impacted the Group’s indebtedness: net debt has moved from - € 3.0 million at the end of 2013 to a positive cash position of € 1.7 million at the end of 2014; available liquidity has also increased to € 16.3 million (€ 10.6 million in 2013).

Total assets increased by € 21.3 million from € 163.2 million to € 184.5 million. The net working capital requirement decreased to € 13.2 million against € 15.9 million in 2013, due to the current business situation. The working capital requirement should return to historical levels in the first half of 2015.

With equity of € 79.5 million on total assets of € 184.5 million, the solvency ratio remains at a very high 43.14% (against 47.23% in 2013). This relative decrease compared with 2013 is due to strong sales growth and the resulting major growth in the balance sheet. The increase in equity is significant in view of the dividend distribution of € 2.9 million in 2014 and share buybacks amounting to € 0.9 million net. Zetes attaches great importance to having a strong balance sheet structure as this allows it to bid for and, where applicable, handle very large deals as well as inspiring confidence in its customers to sign multi-year contracts.

Operations generated a cash flow of € 17.1 million over the year. This amount is broken down into cash flow from P&L, which increased significantly to € 14.4 million (against 10.3 in 2013), relating to the significant increase in operating profit, and a decrease in working capital requirements of € 2.8 million. This decrease does not apply across the board: for instance, a specific project has a temporary impact assessed at € 2.3 million. We also observe a major change in prepayments, with an increase of € 2.4 million on the assets side of the balance sheet (corresponding to prepayments by Zetes, especially for certain second-level contracts with suppliers) and above all a € 5.5 million increase on the liabilities side (this time corresponding to maintenance contracts sold, and relating to future periods and pre-billing of customers).

Investments by Goods ID amounted to € 5.1 million, a decrease from 2013 (€ 5.8 million). The largest investment (€ 2.6 million) was in the development of MCL software and application solutions, based on the new strategy.

In People ID, investments amounted to € 3.3 million. These are residual investments relating to long-term contracts starting in 2014. A large part of the investments to be made for these contracts were already accounted for in the 2013 financial year (€ 4.8 million).

In total, the investments therefore amount to € 8.4 million, including € 2.5 million for the new passport contracts. The remainder represent what could be described as investments that have reached cruising speed within the Group, in the absence of external acquisitions.

In 2014, the Group acquired own shares worth € 0.9 million net. At 31 December 2014, it held 266,936 shares, representing 4.95% of the capital.


In the summer of 2014, Zetes acquired the assets and staff of Rodata (Vienna, Austria), which was in difficulty. Reorganization and training the team in the Group’s solutions brought about a rapid resurgence in activity, focussing on customer service.

Organic growth is a major motivation for management. However, Zetes continues to pay close attention to opportunities for external growth, whether geographical or technological.


The Goods ID Division saw solid growth in order-taking in 2014 and continues to pursue its strategy of offering value-added solutions. Naturally, the division remains vulnerable to its customers’ investment decisions, which are in turn influenced by the economic climate and geopolitical uncertainties. Nevertheless, recurrent business has grown constantly over the last two years. Recurrent business includes maintenance contracts, sale of consumables and, new since 2014, income from rental of solutions (managed services). Although they are not yet a major element of the Division’s total revenue, they have a high gross margin since they combine the creation of software and the provision of services by Zetes.

In People ID, visibility increased for long-term contracts with the launch of new e-passport and biometric visa projects.

In conclusion, Goods ID’s strategy combined with a structurally stronger revenue in People ID should lead to better results in 2015 than in 2014, while last year already followed two successive years of progress.


Investing in Zetes shares has risks attached. These are described in the annual report and remain valid.


The Board of Directors will be proposing to the Ordinary General Meeting that it declare a gross ordinary dividend of € 0.63 per share. This represents a 15% increase on the previous year.


The financial statements presented below are a summary of the annual report which will be available on 27 April 2015. They are drawn up in euros and are in conformity with IFRS standards as adopted by the European Union.


The audit of the annual accounts is under way. The Statutory Auditor has confirmed that his audit procedures, which are substantially completed, have not revealed the need for any material correction to the accounting information contained in the press release.


Publication of the Annual Report: 27 April 2015
Ordinary General Meeting: 27 May 2015

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