2010 - A record year. Resurgent growth in Goods ID, excellent results in People ID


Zetes posts its best year ever at all levels, with sales of € 216.7 million (+29.4%), current EBITDA of € 19.1 million (+40.4%) and net profit of € 8.2 million € (59.9%).

2010 was marked by the return to growth. The second half saw strongly rising sales in Goods ID. The People ID activity posted an excellent year. This development, which had been expected, is linked to the LT contracts (secure documents) all reaching the full implementation stage and the impact of significant shorter-term projects.

With these strong figures, Zetes will propose to the General Assembly that it announces a dividend and an extraordinary dividend for a total of € 1.00 per share, against € 0.36 in 2009.

  • Group: 2010: a record year from sales right through to net income
  • Group sales of € 216.7 million (+29.4% vs. 2009)
  • Gross margin of € 88.7 million (+16.0%)
  • Current EBITDA of € 19.1 million (+40.4%)
  • Net current profit of € 8.7 million (+53.3%)
  • Net profit of € 8.2 million (+59.9%)
  • Goods ID: very good performance supported by growth
  • Sales of € 155.3 million (+18.0% vs. 2009)
  • Gross margin of € 63.0 million (+8.9%)
  • Current EBITDA of € 11.4 million (+15.5%)
  • People ID: Operating profit up 70% for the second consecutive year
  • Sales of € 61.4 million (+71.6% vs. 2009)
  • Gross margin of € 25.7 million (+38.3%)
  • Current EBITDA of € 10.8 million (+67.5%)
  • EBIT of € 7.9 million (+70.1%)


Zetes has returned to growth in its two sectors of activity. The increase already seen during the first half in Goods ID accelerated during the second half. Parallel with this, the People ID activity benefited from the double effect of a very sustained level of production for all its long-term contracts (identity card and passport) and of substantial "build and transfer" contracts (DR Congo in particular).

The global gross margin was € 88.7 million, up +16% on 2009. Growth was supported by strong equipment sales in both People ID and Goods ID. As equipment sales obviously carry a smaller margin than secure documents and services, gross margin as a percentage of sales contracted from 45.7% in 2009 to 40.9% in 2010,  while, in absolute amount, gross margin moved positively from € 76.5 million to € 88.7 million.

Good control of operating costs enabled the Group to post record performance indicators. Current EBITDA amounts to € 19.1 million and EBIT to € 11.4 million.

Net profit of the Group is € 8.2 million, up 59.9% on 2009.

1. Goods ID

The second half was marked by strongly accelerating sales growth. More precisely, a first half in which sales revenue improved only slightly was followed by the best second half in the company's history. At the end of the year, sales were well above the previous high of 2008 (€ 148 million). And it is today's growth that is generating the recurrent revenue base of the future.

While business remains cautious with capital spending, regulatory constraints in terms of traceability as well as the quest for productivity gains remain the most important determining factors in customers' investment decisions. Postal services and the pharmaceutical industry were the main growth markets in 2010.

Contracts worth several million euros were signed and (partially) carried out with undertakings like An Post (Ireland, postal services) or Bristol Myers Squibb (pharmaceutical production).

Sustained development efforts (software in Belgium and England, hardware in Germany) have enabled Zetes to position itself in these markets.

Maintenance, support services and supply of consumables remained stable compared with 2009. Both the sales revenues and margins are comparable to previous years.

In volume terms, retailing remains the largest sector. In food retailing in particular, companies are investing to improve the productivity and quality of the distribution chain. 

Production industries and transport, which in 2009 slashed investments, are also beginning to invest again. Increased traceability requirements and the search for productivity gains are driving these decisions.

In Zetes' North region, growth was driven by major projects in Ireland (postal services) and the Nordic countries (retail). In the Central region, Germany is gradually returning to growth. The Benelux region continues to develop in all sectors of the economy. Finally, the southern European companies are the ones that have seen the least growth. However, except for the subsidiary in Greece, they have resisted very well in 2010.  Prospects for 2011 remain good in larger countries (France and Spain), despite a depressed economic situation.

Internal growth and currency effects

In Goods ID, the impact of currency fluctuations is limited and reflects the appreciation of the pound sterling. In terms of income, this represents about 0.7% of sales.

Comparative figures for 2009 and 2010 on a constant scope basis show that sales growth (+16%) is mainly internal in nature. A breakdown of this internal growth reveals an unchanged situation in recurring activities, growth in services and, especially, strong revenue growth in the equipment area, mostly in the last quarter. Second half sales exceeded the previously highest level ever (first half of 2008).

The impact of acquisitions (Netwave and ImageID) is limited to € 2.5 million, increasing sales by just 2%. The contribution of the new business unit in Greece is slightly negative, reflecting a difficult macroeconomic situation. The introduction of a more effective and solutions-oriented team is under way. In retail, the first orders from multinational companies should be be executed in 2011.

The adoption of the Image ID technology is proving slower than initially expected. In 2010, sales were insufficient to cover costs, which explains the negative contribution of around € 0.9 million. Zetes, however, continues to believe in the technological solution and the current sales cycles suggest a gradual return to equilibrium. Besides the intrinsic pertinence of the Image ID solution, the differentiation from the competition by means of a new and innovative solution also opens up the opportunity to enter markets with other solutions.

In conclusion, the Goods ID activity clearly rebounded in the second half of 2010. Zetes' readiness to continue investing during the crisis put it in a strong position when recovery came. The recent growth has brought sales revenues back to pre-crisis levels and feeds the reservoir of future recurring revenue.

Finally, in early 2011, Zetes acquired 100% of the company ANVOS (Germany). This small, very specialized and highly reputed company in the field of Print & Apply strengthens the labels application offering in the Central region. It also enables Zetes to cover, with a competent team, the market where demand for these solutions is highest, which is manufacturing industry in Germany.

2. People ID:

2010 is the first year that the strategy implemented in People ID is reflected in the figures:

  • The long-term contracts garnered over the last 8 years have all contributed to sales and to operating profitability.
  • Its policy of intensive prospecting has also enabled Zetes to conclude and carry out some attractive short-term contracts.

This has resulted in sales of € 61.4 million, up 71.6%, and a current EBITDA of € 10.8 million current, up by a similar amount.

Long-term "Build and Operate" contracts.

During the second half, production of blank identification cards began for the State of Israel. By year-end, approximately 20% of the cards had been produced. The balance will be manufactured during 2011 and 2012, with personalization expected to start in the second half of 2011.

The process of renewing existing identity cards in Belgium started in 2010 and the roll-out of the Portuguese ID card continue in 2011.

Finally, despite a troubled situation, the distribution of biometric passports has continued in Côte d'Ivoire.

These contracts for the issuance of secure documents call for major business development efforts, with sales cycles that are long and difficult to predict. Once the contract has been signed, the first years are devoted to investment and validation of the documents and processes. But once these steps have been completed, these projects offer the Division a high degree of visibility and predictability. 

"Build and Transfer" contracts

Projects often related to the preparation of voter lists were delivered in 2010:

  • Central biometric files for Togo at the beginning of the year, and for another West African country at the end of the year.
  • Complete solution and biometric kits for the Democratic Republic of Congo. 9,500 kits were delivered in 2010. The technical assistance and training services will continue in 2011 as electoral enrolment moves forward in the Congolese provinces.
  • Enrolment solution for the Congolese police forces.
  • Deployment of biometric enrolment infrastructures in Belgian embassies for the issuance of Schengen zone visas.

For the second consecutive year, current EBITDA rose almost 70%, taking it from € 3.8 million in 2008 to € 10.8 million in 2010. Over the same period, sales have more than doubled, highlighting the growth potential of this market.

EBITDA margin remained stable (Current EBITDA / Sales : 17.5%) in 2010 compared with 2009 (18%). These margins reflect both significant investments in production infrastructure and very high entry barriers: advanced technical and technological skills, requirements for customer references, lengthy sales cycles, and the like. 

The need for people identification and authentication is constantly rising with cross-border mobility, electoral processes, the fight against identity fraud in the social security area, ... In the meantime, customers are increasingly demanding quality references and proven experience from potential suppliers. Zetes has succeeded over the last ten years in acquiring the necessary expertise in the design and manufacture of secure documents, using all the experience it has gained in Goods ID to design and install complete solutions incorporating fixed and mobile biometric equipment connected by telecommunications to centralized databases. Zetes has also developed middleware solutions for communication between the electronic ID card microprocessors and government and private applications. Zetes has the highest certifications in information security (ISO 27000.1) and has accumulated excellent references in the fields of electronic identity cards, biometric passports and visas, and social security identity cards. 

3. Group

The costs of the Corporate Division grew by 13.4% to € 3.1 million, well below the growth of Group sales. The Zetes model remains based on strong operating divisions, with strategy definition, financial control and external growth as the main tasks of the Corporate Division. 

Group sales revenue stood for the first time at over € 200 million, representing growth of 29.4% compared with 2009. The Goods ID Division remains by far the largest in terms of sales revenue (71.6% of total) but the greatest growth comes from the People ID Division (+71.6% versus 2009)

Current EBITDA of the Group is € 19.1 million versus 13.6 million in 2009. The Group achieved  a Current EBITDA/Sales margin of 8.8%, as against 8.1% in 2009. A remarkable feature is that, for the first time, the contribution to operating profitability of People ID is very close to that of Goods ID.

The complementarity of the two divisions was also evidenced by the support provided by the Goods ID Division for the execution of the largest projects in the People ID division.

Non-current charges in a net amount of € 0.4 million relate primarily to restructuring, and essentially to the grouping on a single site of all operations in France.

Depreciation on fixed assets amounted to € 4.6 million. The € 1 million increase compared with 2009 reflects the coming fully on stream of the People ID contracts and the depreciation of the resultant production facilities. Valuation allowances on inventory (€ 0.7 million) are similar to those of the previous year. These relate in particular to the writing down of equipment kept for the execution of maintenance contracts.

EBIT reached € 11.4 million in 2010, up 53.8% compared with 2009.

Net financial expenses amounted to € 0.58 million. Interest expense has increased following the takeover of Netwave (Greece), which had a financial debt of € 2 million. From 2011 onwards, the Greek subsidiary will benefit from the Group's credit conditions, which will reduce the cost of its debt.

The tax rate was 24.4%, giving a total tax charge of € 2.64 million. The net profit comes out at € 8.2 million, up sharply from 2009 (+ € 3.1 million or 59.9%).

Net earnings per share is € 1.57, up 63.2% on 2009.


The very high growth in the second half of 2010 has had a significant impact on the balance sheet, with

total assets increasing in the space of one year from € 130.4 to € 158.3 million. Net working capital needs have rise from € 12.0 to 16.4 million. The high level of activity during the last quarter has increased customer receivables and supplier payables, with no change in days' receivables or payables. 

Inventory has risen by € 4.0 million, most of this increase being related to the long-term contracts in People ID (Belgium and Israel).

With equity of € 77.9 million on total assets of € 158.3 million, the solvency ratio remains at a very high 49.2%. This very strong balance sheet places Zetes in a position to address and, where appropriate, take on very large deals. Indeed, in a time of crisis, multinational clients will be particularly concerned to select suppliers that are both technically and financially solid.  

The conclusion and, especially, the implementation of a contract to deliver on the scale of the Congo calls for financial credibility and the ability to muster substantial resources.

As is to be expected after a period of strong growth, the net cash position is down to € 10.1 million, which is € 3.0 million lower than in 2009. This situation is also the result of acquisitions (taking over of the debts of Netwave) and of significant investments in 2010.

The cash flow from operations is € 11.1 million, which breaks down into € 14.7 million in the income statement and € -3.6 million for working capital needs.  The cash tax expense (€ 3.5 million) explains most of the difference between EBITDA and operating cash flow. The increase in working capital needs reflects the strong sales growth in the second half of 2010.

Investments by Goods ID reached € 4.6 million, up from previous years. Faced with the impossibility of finding suitable rented accommodation for the Print & Apply activities in Belgium, the group decided to acquire a building (€ 2 million).  The Group also renewed its enterprise management systems in several countries (€ 0.7 million). Finally, € 2.1 million of development expenses were capitalized.

Investments in People ID amount to € 2.1 million and relate primarily to improved production and personalization equipment in Belgium (€ 1.5 million).

These investments have been made out of equity, as have the acquisitions made in 2010 (Netwave [Greece] and Phi Data [Netherlands]). Given the costs associated with bank borrowing, Zetes favours the use of own funding. It has also prepaid a loan with a residual maturity of 3 years. 

However, the company continues to maintain a sufficient liquidity position to enable it to seize acquisition opportunities. In this way Zetes was able, In November 2010, to acquire very quickly the assets of Phi Data Nederland, which had gone bankrupt.

The Group continues to generate substantial cash flows. A significant portion of these are devoted to the development and expansion of the company and another portion to servicing the dividend and to repurchasing shares. The balance is held in anticipation of acquisition opportunities, as mentioned above.


In January 2010, the company took a 51% shareholding in Netwave (Athens, Greece). Given the very difficult situation of the Greek economy, this company made a negative contribution to the results of its division. 2010 was used to train staff and to install a new management team.  A positive contribution to Group results is expected in 2011 with the deployment of the first large projects for multinational clients.

In November, Zetes acquired the assets of a Dutch competitor that had gone bankrupt.  This opportunist acquisition reinforces Zetes' presence on the Dutch market for printers and consumables.

Early in 2011, Zetes acquired the Anvos company in Germany. This small and very specialized company in the field of Print & Apply reinforces its offering in the Central region.

Several dossiers are right now under examination and could lead to acquisitions in the coming months. Zetes is looking for companies that fit into the Group's strategy and organization, at prices that give room to create value post acquisition. This means companies which bring in new competences and technology or which complete the group's geographic coverage.


The experience of the second half of 2010 points to companies beginning to invest again. While the retail sector, with its constant search for productivity gains, never stopped investing, other production or transportation-related sectors slashed investments in 2009 and early 2010. Gradually, larger-scale projects have reappeared, in particular in the field of mobility.

Barring a deterioration in the business climate, Zetes expects all sectors to continue on this path in 2011. The search for competitiveness and the need for quality are drivers for customer investment. As part of the deregulation of the sector, postal companies in particular are looking for productivity gains and better service to their customers. Zetes has developed significant expertise in this area in the Netherlands, Portugal and, most recently, Ireland.

Elsewhere, the most regulated sectors (pharmacy and fresh foods) are facing traceability needs at individual unit level. Zetes has a range of solutions available such as Image ID, RFID and Print & Apply that provide an adequate response to these needs. In all these solutions, Zetes combines software solutions with equipment purchased externally or, if necessary, developed internally.

Zetes therefore expects that these sectors will be looking for high added value solutions for several years to come.

In People ID, Zetes has acquired a very good visibility, thanks to its long-term contracts.  2011 sees the renewal of the identity cards issued in Belgium in 2006, further dissemination of the Portuguese card, and the beginning of full-scale distribution of the Israeli electronic ID card. The unsettled situation in Côte d'Ivoire has slowed the issuance of new passports. The infrastructure remains in place, however, with reduced production.

In the area of short-term contracts, Zetes is currently delivering training services and technical assistance in the preparation of the electoral register to the Congolese state and the UNDP (United Nations Development Programme). This contract will produce less sales revenue than in 2010 (when it involved essentially the delivery of equipment) but a higher margin.

Business development efforts remain intense, because sales and decision cycles are long and often hard to predict.

Zetes continues to prospect many projects in both Africa and Europe. It is this ongoing investment in business development that will enable the People ID division to continue its strategy of expanding the number of long-term contracts and to conclude every year several other "Build and Transfer" contracts. This strategy, which has been in place for several years now, has shown its relevance by enabling the Division to grow quickly and reach profitability levels similar to the Goods ID division.

In conclusion, even if 2010 was an exceptional year in terms of sales and profits, the company is working hard to repeat these results in 2011.


Investing in Zetes shares has risks attached. These were described in the 2009 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 € 0.47 (an increase of 30.6%) and a gross extraordinary dividend of € 0.53, for a total amount of € 1.00 per share.


The financial statements presented below are a summary of the annual report which will be

available on 22 April 2011. 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 its auditing work, which is essentially complete, has not revealed the need for any significant correction

to the accounting information contained in the press release.


Ordinary General Meeting: 25 May 2011