Annual Results 2012


ZETES had a successful second half in 2012, with current EBITDA up from € 5.3 million in the first half to € 8.8 million.

Goods ID: very much improved performance in the second half, and excellent profitability of the People ID contracts.

Sales amounted to € 214.1 million (vs. € 220.6 million in 2011) and current EBITDA to € 14.1 million (vs. € 18.6 million in 2011).

The People ID Division continues to generate very good profitability and has concluded a.o. a new long-term contract to produce and deliver Belgian driving licences.

After a difficult first half in terms of order taking and execution, the Goods ID division recovered in the second half, back to the profitability levels (current EBITDA) of 2011, and at the same time concentrating its development efforts on 6 flagship solutions.

Cash flow from operations remained at a very good € 12.4 million. For this reason, confident in the future and its ability to continue to generate significant cash flow, Zetes will propose to the Annual General Meeting that it declare a dividend of € 0.38, together with a capital reduction of € 0.17 per share, giving a stable total payout compared with 2011.

Group sales of € 214.1 million (-2.9% vs. 2011), 
Gross margin of € 93.7 million (-1.9%),
Current EBITDA of € 14.1 million (-24.3%),
CASH FLOW from operations of € 12.4 million

Goods ID: Recovery in the second half
Sales of € 171.5 million (+0.5% vs. 2011),
Gross margin of € 69.3 million (+1.2%),
Current EBITDA of € 7.4 million (-24.7%),

People ID: Good profitability and new contracts
Sales of € 42.6 million (-14.5% vs. 2011),
Gross margin of € 24.4 million (-9.6%),
Current EBITDA of € 9.9 million (-18.0%),


The Group experienced a slight decrease in sales (-2.9%).

Goods ID managed to grow very slightly despite starting the year in a difficult context.  For People ID, in the absence of any major "Build and Transfer" project with a strong hardware component, sales fell by 14.5%.

The Group's gross margin is growing in relative terms in both divisions, highlighting the value-added strategy. In 2012 it stood at € 93.7 million, or 43.8% of sales (against 43.3% in 2011)

Operating expenses are up by 3.6%, though down 1.0% in the second half from the first half, reflecting cost control efforts implemented during the year.

Current EBITDA amounted in 2012 to € 14.1 million. Nearly two-thirds of this amount was generated in the second half, which was much stronger than the first half.

The implementation of cost control policy, which already produced effects in the second half, led Zetes to recognize non-recurring expenses of € 1.2 million. 
Finally, the net current result reached € 4.5 million, with a net profit of € 3.5 million. 

1. Goods ID

Order-taking and, by extension, performance, was very volatile in the first half of the year, varying as much as 50% from one month to another, essentially depending on the climate of uncertainty surrounding the eurozone. Many orders incorporate service provision. In a situation of volatile order-taking, it becomes difficult to schedule this provision, and to draw a regular income flow from it. This significantly impacted the results for the first half. The second half proved more stable, enabling Zetes to return to the value added levels (gross margin) of the second half of 2011, with growing EBITDA. From one half to another, EBITDA multiplied by a factor of 2.3 (€ 2.2 million in H1 and € 5.2 million in H2).

On an annual basis, the performance is, as shown below, strongly influenced by the first half. In the second half of 2012 the division returned to profitability ratios comparable to 2011 (current EBITDA/Sales: 5.8%.

Furthermore, in order to better withstand the greater volatility of order-taking, which considerably complicates project planning and execution, Zetes has evolved its business model and is now concentrating on certain of its solutions. The Division carefully analysed the economic sectors and areas of activity where mobility and automatic identification solutions are the most critical and can potentially generate greater added value for customers. By crossing these data with Zetes' areas of expertise, 6 flagship solutions were identified.

These solutions are converted by the Group into products that capitalize on the experience gained in the application softwares that meet the needs of customers in the same industry.  In this way a software solution is developed (possibly combined with a specific hardware) that responds adequately to the challenges of a particular industry and which replaces, for both the client and Zetes, developing a tailored solution. Initiatives had already been taken at the regional level. Today, the approach goes further with Group resources channelled to these 6 solutions only. The expected productivity gains for Zetes are substantial because all developments are focused on one product that is continuously enriched for each key solution.

With this model, both customers and to the Goods ID Division come out ahead. In addition, Zetes clearly defines its area of ​​expertise in 6 solutions that meet the needs of the supply chain from the production unit to retail store via logistics and transport.

6 flagship solutions for the supply chain

This strategy enables Zetes to better serve certain economic sectors that are targeted with sophisticated products, while retaining the flexibility to develop specific projects as and when customers request.

The use of a common development platform created by the Group makes it possible to support the mobile terminals of several manufacturers and most communication protocols.

Customers have clearly expressed their interest in these flagship products because Zetes expertise is accessed faster and more effectively via products than via human beings.   A small number of major customers in manufacturing, logistics and retailing have already placed orders for one or the other of these "Group" solutions that are being deployed in 2013.

Some solutions, such as those linked to the Cloud, lend themselves very well to a recurring revenue model.  In this case Zetes provides an integrated solution (hardware, software, services) against monthly payment per terminal for a fixed term of 3 to 4 years. This model is very similar to that applied in "Build and Operate" contracts in People ID, and increases the predictability of income. In some cases, the leased assets are shown in the balance sheet (see below). But, eventually, in most cases, based on agreements with the financial institutions, the physical assets will be leased to the customer by the latter.

Internal growth and currency effects

In Goods ID, the impact of currency fluctuations is very limited.

One observes an improvement in the organic results of the division, which is explained by the counter- performance of South Africa in 2012.

2. People ID

The People ID Division relied on "Build and Operate" contracts to generate three-quarters of its revenue.

Major "Build and Transfer" contracts with an intensive hardware component are missing from the 2012 sales figure. This is why the sales figure is down by 14.5% and gross margin by 9.6%. On the other hand, the gross margin for the division rose to 57.2% of sales (vs. 54.1% in 2011), highlighting the added value delivered in all projects and the importance of services in the income of the division.

All "Build and Operate" contracts contributed to the result: eID and SIS card in Belgium, eID in Portugal and in Israel, biometric passports and visas in the Côte d'Ivoire. 

"Build and Transfer" projects were undertaken in the context of electoral cycles, in Sierra Leone for the United Nations and in Togo.  Other smaller projects were carried out for the banking and insurance sectors as well as for civil servant identification in Chad.

In terms of business development, the Belgian government awarded Zetes the contract for the new driving licence at the end of the year. Zetes will produce approximately 800,000 licences a year for a minimum of five years ("Build and Operate" model).

Operating expenses are down by 2.8%. Non-critical functions for major projects are still outsourced. As there were fewer large "Build and Transfer" projects, operating costs were kept down.

The Division continues to post excellent profitability ratios thanks to its added value strategy (gross margin) and permanent cost control.

Current EBITDA as a % of sales remained high at 23.2%, as the "services" component in the sales figures is very high, and "Build and Operate" contracts are capital intensive. 

3. Group

Corporate Division expenses amounted to € 3.2 million. The Zetes model is based on strong operating divisions and a light corporate structure. The main tasks of Corporate are strategy definition, financial control and external growth. 

Group sales amounted to over €214 million. Recurrent sales revenue consists of income from long-term contracts (“Build and Operate”) in People ID and maintenance and consumables income in Goods ID. Together they amount to around € 87 million, covering over 40% of consolidated sales revenue.  

Non-recurring charges amounted to a net € 1.2 million. These relate to restructuring undertaken in Goods ID to align the costs of certain entities with their revenue and gross margin potential, as well as the strategy of converting bespoke solutions into software products (introduction of the new organization).  

Depreciation and amortization on non-current assets amounts to € 5.0 million, very similar to the figure for 2011. Write-downs on inventory (€ 0.4 million) and receivables (€ 0.2 million) are down slightly on 2011.

Current EBIT reached € 6.6 million in 2012, 71% of which was generated in the second half.

The net financial result is composed of bank charges (€ 0.215 million for cross-border payments and various guarantees such as bid or performance bonds), the foreign exchange result (€ 0.175 million) and finally interest expense (€  0.150 million).

The effective tax rate was 28.9%, giving a total tax charge of € 1.4 million. This is close to the normative rate of the company.  Finally, net profit reached € 3.5 million, with a net current profit of € 4.5 million.

The net current result per share is € 0.86.


2012 favourably impacted the balance sheet. Total assets reduced by € 4.5 million from € 163.5 million to € 159.0 million.  Net working capital needs were down from € 13.7 to 12.7 million. Inventory remained stable at € 15.6 million, in line with the evolution of sales.

With equity of € 77.5 million on total assets of € 159.0 million, the solvency ratio remains at a very high 48.8% (47.9% in 2011). This ratio is even more remarkable when one bears in mind that the company proceeded in 2012 to distribute a dividend of € 2.9 million and to buy back shares (eliminated in consolidated equity) in an amount of € 1.7 million. Zetes attaches great importance to having a strong balance sheet structure as this allows it to bid for and, where appropriate, absorb very large deals.

This good financial stewardship allows it to present, after investments of over € 7.9 million, a net cash position of € +7.5 million, which is almost unchanged compared with 2011.

The cash flow from operations is € 12.4 million, which breaks down into € 10.5 million in the income statement and € 1.8 million from the reduction in working capital needs.  The cash tax expense (€ 1.7 million) explains most of the difference between EBITDA and operating cash flow. The decrease in working capital needs reflects the stable nature of sales.

Investments by Goods ID amount to € 4.1 million, up from previous years. These investments break down into non-current assets for internal use (€ 2.3 million) and assets supporting managed services (operating lease contracts with customers: € 1.8 million). Development costs were also capitalized in an amount of € 1.8 million (vs. 2.1 million in 2011).  Investments by People ID amount to € 1.2 million and relate essentially to improved production and personalization equipment in Belgium.

These investments were made out of the company's own resources.  The Group continues to generate substantial cash flows. A significant portion of these are devoted to the development and expansion of the company, to servicing the dividend and to repurchasing shares.

In 2012, the Group acquired own shares worth € 1.7 million. At 31 December 2012 it held 215.769 treasury shares.


At the end of the first half, Zetes acquired the InCaptio company based in Prague, Czech Republic. In Captio, which specializes in Goods ID, posts an annual turnover of just of € 2 million. The economy of the Czech Republic, like its neighbour Slovakia, is manufacturing- intensive and expanding. The solutions Zetes has developed elsewhere in the group will promote this company's growth in its home markets.


The Goods ID Division began 2013 with good prospects, as order taking is better and, especially, more regular than last year. The first commercial successes of the six key solutions are already appearing with the first references signed in the retail sector, as well with production companies and courier services. 

Crisis and uncertainty as still a part of daily reality and can impact the pace of customers' decisions. However, some investments become priority in response to new regulatory requirements (serialization and traceability), where they improve quality of service (proof of delivery), or where they permit significant productivity gains (warehouse or retail store organization). The 6 key solutions adopted all meet at least one of these arguments.

An important base is provided by recurring business (25 to 30% of income depending on the degree of maturity of subsidiaries). This has based until now on maintenance and repair services and the sale of consumables (labels, ribbons, etc.). In the future, it will be gradually increased by rental income (managed services). This will further strengthen the robustness of the Division's revenue stream. 

In People ID, visibility remains very good on all long-term contracts ("Build and Operate"). Production of the Belgian driving licence will gradually generate additional income, especially from the second half onwards, when all municipalities will be ready to deliver the new document.

At the start of this year, Zetes continues its voter enrolment mission in Togo. Other smaller projects are also running.

In terms of business development, the priority remains to conclude new "Build and Operate" contracts. These rarely generate considerable income in the first year but they ensure the prosperity of the Division in the medium and long term. Zetes is currently taking part in several bids, both in Europe and Africa, and continues its business development work on both continents.

The People ID Division is very busy in the first half with the launch of new contracts like the Belgian driving licence, though these will start contributing seriously to earnings only in the second half.

In summary, the good recovery in Goods ID combined with earnings of the same order in People ID should provide considerably better results in the first half of 2013 than in the equivalent period in 2012.


Investing in Zetes shares has risks attached. These were described in the 2011 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 € 0.38 per share. The dividend will be supplemented by a capital reduction in the form of a repayment to shareholders of € 0.17 per share, giving a stable total payout compared with 2011.


The financial statements presented below are a summary of the annual report which will be available on 29 April 2013. 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.


Extraordinary General Meeting: 22 April 2013

Publication of the Annual Report: 29 April 2013

Ordinary General Meeting: 29 May 2013

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