Zetes Annual Report 2014 FULL EN

ZETES ANNUAL REPORT 2014 EFFICIENT COLLABORATION SUSTAINABLE GROWTH

IN NATURE THE SUCCESS STORIES ARE ALL ABOUT COLLABORATION IN EFFICIENCY

CONTENTS

03

HIGHLIGHTS

04

WHO IS ZETES?

06

MESSAGE FROM THE EXECUTIVE MANAGEMENT

09

REPORT FROM THE BOARD OF DIRECTORS

18

STRATEGY

22

ACTIVITIES

38

INNOVATION

42

SOCIAL RESPONSIBILITY

46

SHAREHOLDERS INFORMATION FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

Zetes is an international Group highly specialised in identification & mobility solutions. Connecting what matters is at the heart of our business: physical movements and digital flows, our customers and their critical data, but also consumers and corporations, citizens and governments. By using the most innovative technologies, we help our customers to improve speed, quality and accuracy in order to be on the leading edge of their industry. This has made us a pioneering leader on our market.

ZETES GROUP - KEY FIGURES In € '000 OPERATING SITUATION Sales Gross Margin % Sales Operating Expenses Current Ebitda (1) % Sales Depreciation on fixed assets Depreciation on development costs Write-downs on stock and receivables Current Ebit (2) EBIT Net current result Net Result

2009 167 471 76 457 45.7% (62 851) 13 606 8.1% (3 551) (1 233) (737) 8 127 7 425 5 673 5 135

2010 216 738 88 711 40.9% (69 614) 19 096 8.8% (4 631) (1 472) (1 123) 11 824 11 416 8 694 8 210

2011 220 562 95 477 43.3% (76 837) 18 640 8.5% (4 944) (1 498) (790) 11 041 10 055 7 005 6 244

2012 214 126 93 699 43.8% (79 583) 14 117 6.6% (5 033) (1 686) (538) 6 645 5 438 4 512 3 526

2013 211 472 91 446 43.2% (77 911) 13 535 6.4% (4 927) (1 748) (824) 5 931 5 111 4 028 3 397

2014 245 270 103 579 42.2% (84 374) 19 205 7.8% (5 501) (2 324) (416) 10 798 9 783 6 917 6 196

CASH FLOW STATEMENT (KEY FIGURES) CASH AND CASH EQUIVALENTS, BEGINNING BALANCE

2009 12 710

2010 18 140

2011 14 599

2012 14 306

2013 12 797

2014 10 585

CASH FLOWS FROM OPERATIONS OF WHICH: Cash flows from the P&L Working capital

14 684 10 850 3 834

11 117 14 681 (3 564)

18 174 14 499 3 675

12 381 10 541 1 840

4 026 10 337 (6 311)

17 070 14 369 2 701

CASH FLOWS RELATING TO INVESTING ACTIVITIES OF WHICH: Fixed Assets Subsidiaries, net of cash acquired Developments

(7 241) (4 323) (2 098) (1 176)

(10 010) (6 715) (1 278) (2 147)

(13 424) (4 701) (6 550) (2 473)

(7 662) (5 361) (740) (1 834)

(10 696) (7 986) (343) (2 756)

(8 497) (5 851) (322) (2 582)

CASH FLOWS RELATING TO FINANCING ACTIVITIES OF WHICH: Proceeds from finance lease/bank loans Repayments of finance lease liabilities/bank loans Bank overdrafts increase (decrease) Dividends paid Own shares

(2 088) 2 558 (1 388) (403) (1 940) (467)

(4 870) 113 (2 837) (49) (1 911) 466

(5 065) 4 614 (2 018) (966) (5 336) (1 267)

(6 199) 0 (2 080) 588 (2 895) (1 685)

4 672 3 947 (2 108) 6 185 (2 875) (250)

(3 009) 3 160 (2 186) 116 (2 857) (931)

CASH AND CASH EQUIVALENTS, CLOSING BALANCE

18 140

14 599

14 306

12 797

10 585

16 290

FINANCIAL POSITION (KEY FIGURES) ASSETS INLCUDING: Tangible assets Intangible assets Goodwill Deferred tax assets Inventories Current trade and other receivables Current prepayments Cash and cash equivalents TOTAL ASSETS

2009

2010

2011

2012

2013

2014

8 893 3 874 33 108 1 867 11 102 46 370 6 017 18 140 130 376

12 548 4 690 34 970 2 749 15 155 65 593 7 161 14 599 158 346

13 020 5 636 40 125 3 028 15 351 62 345 8 696 14 306 163 523

13 625 5 433 39 878 3 204 15 631 57 724 9 900 12 797 158 964

15 873 6 659 39 924 4 385 14 302 57 986 10 588 10 585 163 187

16 386 6 489 40 033 4 885 17 146 67 623 13 116 16 290 184 474

EQUITY AND LIABILITIES INCLUDING: Total equity Non current interests bearing borrowings Deferred tax liabilities Current interests bearing borrowings Current trade and other payables Current tax liabilities Other current liabilities TOTAL EQUITY AND LIABILITIES

70 341 3 049 1 435 2 408 51 166 394 912 130 376

77 930 963 1 686 4 021 70 333 1 403 1 280 158 346

78 385 2 548 1 994 4 345 71 316 1 609 953 163 523

77 501 798 1 854 4 921 68 168 2 617 1 715 158 964

77 072 2 921 2 550 10 983 65 858 1 288 1 450 163 187

79 539 792 2 698 14 208 81 346 3 727 1 040 184 474

54.0% 11 966 7.1% 15 732 13 033

49.2% 16 427 7.6% 10 577 10 076

47.9% 13 676 6.2% 9 961 8 024

48.8% 12 685 5.9% 7 877 7 471

47.2% 15 910 7.5% (397) (2 968)

43.1% 13 171 5.4% 2 083 1 680

2009 803

2010 902

2011 1 097

2012 1 070

2013 1 118

2014 1 173

Solvency ratio (Equity / Total assets) Working capital requirement (3) Working capital requirement / Sales Short term net cash position (4) Net cash position TOTAL HEADCOUNT Headcount on December 31st

(1) Current EBITDA = current EBIT before amortizations, depreciations and impairment losses (2) Current EBIT = EBIT excluding restructuration costs and other non current elements (badwill/SOP/Other) (3) Inventories + trade receivables and other receivables + advanced payments - trade payables and other payables - prepayments (4) Short term cash - Current interets bearing borrowings

SALES : € 245.3 MILLION in € million 200

190.6 170.7

150

171.5

155.3

148.3

80 61.4

60

131.6

54.6

49.9 42.6

100

40

35.8

200

177.6

216.7

220.6

214.1

211.5

2010

2011

2012

2013

167.5

150

40.3

29.3 50

245.3

250

171.2

100

20

50 0

2008

2009

2010

2011

2012

2013

2014

0

2008

2009

2010

Goods ID

2011

2012

2013

2014

0

2008

2009

People ID

2014

Group

CURRENT EBITDA : € 19.2 MILLION in € million 20 16

14.3

20

16

16

12.1 11.4

12

9.9

12

9.9 7.4

8 4

4

2008

2009

2010

12.1

10.8

2011

2012

2013

2014

0

10.6

9.9

9.1

8

0

20

7.7

6.4

2009

2010

2011

2012

2013

2014

Operating expenses

0

2008

2009

2010

2013

2014

Group Including corporate costs

PEOPLE ID GROWTH 2010

2011

2012

2013

2014

%

155 290 170 703 171 518 171 187 190 639

11.4%

35 808

61 448

49 859

42 608

40 285

54 630

35.6%

74 760

9.4%

18 556

25 663

26 959

24 377

23 112

28 819

24.7%

(48 019) (51 652) (58 636) (61 884) (59 226) (62 613)

5.7%

(12 120) (14 885) (14 904) (14 490) (15 433) (18 265)

18.3%

63 047

68 518

69 323

2013

2011

2009

57 885

2012

2012

12

%

Gross Margin

2011

13.5

2014

131 646

2010

14.1

13.6

People ID

GOODS ID GROWTH Turnover

15.2

4

Goods ID

2009

19.2

18.6

8

3.8

2008

19.1

68 334

Current EBITDA

9 866

11 395

9 882

7 439

9 108

12 147

% Current EBITDA / Sales

7.5%

7.3%

5.8%

4.3%

5.3%

6.4%

EBITDA

9 325

11 002

9 258

6 285

8 415

11 186

Current EBIT

6 170

7 054

5 225

2 296

3 201

12 463

11 658

10 367

7 775

9.5%

7.5%

6.1%

622

697

Fixed Assets

1 062

Subsidiaries, Developments

WCR WCR / Sales Headcount

33.4%

6 436

10 779

12 055

9 887

7 679

10 554

37.4%

18.0%

17.5%

24.2%

23.2%

19.1%

19.3%

32.9%

6 365

10 764

11 693

9 879

7 552

10 552

39.7%

6 217

94.2%

4 688

7 865

9 131

7 641

6 159

8 266

34.2%

8 714

6 024

-30.9%

2 031

5 956

4 459

5 047

8 459

8 892

5.1%

4.5%

5.1%

3.2%

5.7%

9.7%

8.9%

11.8%

21.0%

16.3%

889

862

874

907

3.8%

169

194

196

196

233

254

9.0%

4 642

3 147

4 095

3 243

2 522

-22.2%

3 250

2 073

1 299

1 185

4 649

3 328

-28.4%

2 098

1 278

6 550

740

343

322

-6.2%

0

0

0

0

0

1 176

2 147

2 107

1 834

2 584

2 568

-0.6%

0

0

366

0

172

ANNUAL INVESTMENTS :

0 13 -92.3%

HIGHLIGHTS / 3

HIGHLIGHTS

30 years

In 2014, Zetes celebrated its 30th anniversary. It ends the year having made strong progress in both divisions.

Solutions innovation is driving growth in Goods ID. Thanks to differentiated products, it reports double-digit sales increases, in spite of an economic environment that has remained sluggish and reluctant to invest.

In People ID, the long-term contracts concluded in 2013 have since generated their first incomes, and new voter registration projects have been signed in Africa.

Collaborative Supply Chain

The standardization of solutions by market is proving a huge success, providing an adequate response to the problems encountered in each segment of the supply chain.

The Collaborative Supply Chain is the ultimate outcome of our customer offering, linking up our different solutions to respond to the exponential influx of data due to the advent of unit-level product identification.

Zetes is also benefiting from the development of e-commerce, where effective management of logistics processes is a key success factor.

Players in this market are faced with new challenges, to which the Group's solutions provide perfect solutions.

Innovation

People ID

The new Belgian passports have been in circulation since May 2014 and the new Gambian ones were issued in December.

Zetes actively participated in preparing the electoral roll in Uganda and, between late 2014 and early 2015, in Togo. This is the third collaboration with this country’s authorities in the context of elections.

On December 29 a census was taken of the first Ivorian citizens covered by the new universal health coverage plan desired by President Ouattara.

During the course of 2015, they will receive the cards certifying their identity and their insurance status.

The exponential increase in data to be generated, stored, and controlled; the need for increased security against piracy and data tampering; and the growing need for mobility and instant availability’ are the vectors of Zetes’ innovation plan.

Experienced and multidisciplinary teams are dedicated to R&D and to developing solutions to solve these issues. Their inspiration comes from Zetes’ many consultants and salespersons, who maintain daily contact with clients, sharing with them their current problems and tomorrow's challenges.

For us, success calls for close and continuous collaboration with our partners. This enables us to optimize the security of the supply chain and ID documents.

FOUNDED IN 1984 MORE THAN 30 YEARS EXPERIENCE CONDENSED INTO OUR SOLUTIONS N°1 EMEA PROVIDER OF SUPPLY CHAIN SOLUTIONS MORE THAN € 4 MILLION OF INVESTMENT IN INNOVATION 30,700,000 IDENTITY DOCUMENTS PRODUCED DIRECT PRESENCE IN 19 COUNTRIES 150,000 WAREHOUSE OPERATORS WORKING WITH ZETES' VOICE SOLUTION € 3.2 MILLION - DIVIDEND DISTRIBUTED TO SHAREHOLDERS 1,173 EMPLOYEES IN EMEA BIOMETRIC ENROLMENT OF 80,000,000 PEOPLE

OUR CUSTOMERS ARE AN INEXHAUSTIBLE SOURCE OF INSPIRATION "There are fair winds only for he who knows where he is going." This insight, quoted by Seneca two thousand years ago, applies particularly well to Zetes, which in 2014, celebrated 30 years of business success. The company has grown in strength and size, metamorphosing at regular intervals in response to changing markets. The broad strategic options adopted during the last few years are bearing fruit and making the company stronger.

Growth in 2014 occured in both divisions. In Goods ID, despite a sluggish macroeconomic environment, revenue increased by 11.4%. In People ID, the increase was even greater, reaching 35.6%.

In Goods ID, market evolution towards internationalization and increasingly advanced traceability, plus Zetes’ own technological maturity, required us to evolve into a new stage. This took concrete form with the standardization of solutions. Our new offering, covering all the identification needs of the supply chain and facilitating communication between the various stakeholders, is known as the "collaborative supply chain ".

The 'collaborative supply chain' covers all the needs of the supply chain

MESSAGE FROM THE EXECUTIVE MANAGEMENT / 6

In People ID, our success is due to the excellent reputation the company has built up over ten years in the industry.

The confidence governments place in our solutions, our ability to implement them and the support they give our expansion efforts are a testament to this.

Strategic choices and teamwork: the basis of our success In this year's annual report, we have sought to highlight the way we collaborate and work in symbiosis with our customers.

The company's progress in recent years is

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

MESSAGE FROM THE EXECUTIVE MANAGEMENT / 7

the result of both timely strategic choices and our ability to implement them. And for this we would especially like to thank our customers, who are an inexhaustible source of inspiration for our people. Over 75% of our sales every year are generated from existing customers and we would like to take this opportunity to thank them for their renewed confidence.

/“The company's progress in

recent years is the result of both timely strategic choices and our ability to implement them.”

Only by working closely with them, by listening to their needs and the challenges they face and by gaining their confidence, are we able to understand how their markets are developing and to provide relevant answers. Our Research and Development teams thrive on this customer contact. Mastering the proven technologies that provide adequate responses to customers’ challenges, they foresee the new advantages emerging technologies can offer.

Evolving innovation: a creative approach to our customers' challenges Technological innovation is unstoppable and ever faster moving. Zetes strives to select only those advances where the cost of implementation is justified by the expected return on investment. While it has brought its fair share of innovations to the identification market, Zetes practices evolving, not radical innovation. This concept is crucial. While our customers are always seeking solutions to give them a competitive edge, or to facilitate administrative processes, they only wish to implement these solutions in ways that ensure operational continuity.

The Executive Management Left to right: Pierre Lambert, Jean-François Jacques and Alain Wirtz

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

/“Increasing worldwide

mobility, the provision of quality services to citizens, and good governance all call for strong citizen authentification."

Increasing worldwide mobility, the provision of quality services to citizens, and good governance all call for strong citizen authentification. Governments have understood this and come to Zetes for advanced, turnkey solutions that improve services to citizens. Electronics, mobile computing and biometrics have provided adequate responses to their needs.

Based on the same principle of evolutionary innovation, Zetes has introduced the collaborative supply chain. Serialization - that is product identification at unit level - requires the secure connection of all stages of the supply chain. Zetes, with

MESSAGE FROM THE EXECUTIVE MANAGEMENT / 8

its hands-on experience and expertise in computer security, has introduced a platform that combines solutions for different business areas with a secure platform for data sharing between all stakeholders.

This approach, which will generate added value and savings for our customers, has been developed by our own people.

We would therefore like to express our gratitude towards all our employees for their enthusiasm, exceptional teamworking and their willingness to offer an increasingly efficient service.

to improve services to the citizen

Significant earnings growth allows Zetes to pursue an attractive remuneration policy for the shareholders who have entrusted to us the capital needed for developing our business and for investing in continually renewed innovation.

A strong balance sheet : a key advantage Our revenue growth has significantly improved the company's profitability.

Operating results are up over 40% and net profit has jumped more than 80%. This evolution is without doubt linked to the success of our strategy. Developing this

Jean-François Jacques Chairman of the Board

Governments are looking for advanced solutions

strategy, implementing it and deploying it have been costly in time, energy and also in money, which Zetes has secured through its shareholders. A strong balance sheet is a must to ensure the confidence of customers who sign long-term contracts with Zetes, but is also vital for enabling the company to maintain control of strategic choices and their implementation.

Alain Wirtz Chief Executive Officer

Pierre Lambert Chief Financial Officer

REPORT FROM THE BOARD OF DIRECTORS / 9

A CLEAR STRATEGY FOR BUILDING A STRONG COMPANY

Floris Vansina

Paul Jacques

Jean-Marie Laurent Josi

Jean-François Jacques

Hiram Claus

Pierre Lambert

José-Charles Zurstrassen

Michel Allé

Alain Wirtz

Ladies and Gentlemen, dear Shareholders,

Olivier Gernay

The Board of Directors is pleased to present you with its report for the 2014 financial year. The present report covers both statutory (parent company) and consolidated (group) financial statements.

The Board attests that, to its knowledge, the statutory and the consolidated annual financial statements give a true and fair view of the net assets, financial situation and results of Zetes Industries SA and, in the case of its consolidated accounts, the companies included in the consolidation.

It also attests that the management report on the consolidated financial statements includes a true and fair description of the development, operational performance and position of the company, including companies included in the consolidation, and a description of the principal risks and uncertainties with which they are confronted.

The financial statements are drawn up in EUR, in accordance with the IFRS standards adopted by the European Union.

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

REPORT FROM THE BOARD OF DIRECTORS / 10

Balance sheet and cash flow After a year of particularly high investments in 2013, it was essentially current assets and liabilities that increased strongly in 2014, following sales growth.

In Goods ID, investments relate mainly to the development of "Group" solutions and to equipment leased to customers, while in People ID, they concern production infrastructure. While these investments continue to significantly impact on the Group balance sheet, they returned to a more normalized level in 2014.

Stocks are rising in the Goods ID division, almost entirely due to equipment related to the small number of large roll-outs under way.

Compared with 2013, customer receivables and other receivables have increased significantly, as have advance payments. This increase relates to longterm projects in People ID as well as increased sales and accelerated invoicing during the last quarter in Goods ID; older receivables are regularly monitored, but without any significant difference in payment experience.

As expected, the account relating to construction contracts is decreasing. This helps ensure consistent profitability over time of the various long-term contracts.

Sales: € 245.3 million Up 16%

Commentary on the development of the company's business and its current situation Given the limited operational activity of the parent company Zetes Industries SA, it is the consolidated financial statements, which are discussed below, that permit an assessment of the performance of the Zetes Group (Zetes Industries SA and its subsidiaries). The consolidated financial statements are presented before the payment of dividends, which will be decided by the Ordinary General Meeting of 27 May 2015.

The Goods ID Division had a very good year, which confirmed the return of internal

sales growth with upward-moving operating results. Management continues efforts to implement its strategy based on the sale of six specialized solutions for the identification of goods, clearly positioning its offering and demonstrating customer value.

The People ID division also saw its sales increase, supported by the commercial success of short-term projects (delivery of electoral registration kits, AFIS) and the implementation of long-term contracts (Build and Operate). The commencement in 2014 of two long-term contracts, increases Company confidence in the expected evolution of this industry.

Good performance during 2014 has improved the Group's debt structure, converting a net debt of € 3.0 million at the end of 2013 into a net positive cash position of € 1.7 million (12/2014), with cash and equivalents of € 16.3 million.

Total assets increased by € 21.3 million from € 163.2 million to € 184.5 million.

Net working capital needs fell to € 13.2 million, against € 15.9 million in 2013; this decline is not structural and working capital requirement should start rising 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% (47.23% in 2013). The decrease relative to 2013 is explained by strong sales growth and the resulting significant increase to the balance sheet. The increase in equity is significant, given the distribution in 2014 of a dividend of € 2.9 million and the

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

repurchase of own shares in a net amount of € 0.9 million. Zetes attaches great importance to having a strong balance sheet structure as this allows it to tender for and manage very large contracts; and to encourage its customers to sign multiyear contracts.

During the year operating activities generated cash flow of € 17.1 million. This breaks down into cash flow from the P&L, which rose sharply to € 14.4 million (€ 10.3 in 2013) due to the significant increase in operating income, and a € 2.8 million reduction in working capital needs. This decrease is partially non-structural. There is also a significant change in prepayments on the assets side of the balance sheet (corresponding to prepayments by Zetes, including some second-level maintenance contracts with suppliers). Especially notable is a 2.2 times larger increase on

+41.9% EBITDA At € 19.2 million for the Group

REPORT FROM THE BOARD OF DIRECTORS / 11

the liabilities side (€ 5.5 million). This reflects an increase in recurring income, with prepayments consisting mainly of maintenance contracts sold and relating to subsequent periods.

Investments by Goods ID totalled € 5.1 million, down € 0.7 million compared with 2013 (€ 5.8 million). The most significant share (€ 2.6 million) is devoted to development of MCL software and to application solutions, which form the basis for the new strategy.

In People ID, investments amounted to € 3.3 million. These are residual investments in respect of the long-term contracts that were rolled out in 2014, with a large part of the investment needed for these contracts having already been made in 2013 (€ 4.8 million).

In total, investments therefore amounted to € 8.4 million and can be quantified as being at a "cruising" level for the Group, in the absence of external acquisitions.

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

Income statement Group sales revenue amounted to €245.3 million. Recurring revenues continue to grow, supported by offering "rental" solutions, maintenance contracts and the sale of consumables in Goods ID. In People ID, growth is derived from long-term contracts, the size of which increased further in 2014. Together, these recurring revenues cover around 40% of consolidated revenue.

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

The Goods ID Division significantly improved its performance, with sales up 11.4% to a record € 190.6 million. This performance is all the more remarkable for being internally generated and growth is to a large extent the result of major equipment deliveries. With operating expenses well controled, the division's recurring EBITDA increased by 33.4% to € 12.1 million.

In the People ID Division, the year was marked by a good mix of short and longterm projects, giving strong growth and excellent results. Sales were up 35.6% to € 54.6 million, and recurring EBITDA up 37.4% to € 10.6 million.

Overall, the Group's current EBITDA performance improved by 41.9% to € 19.2 million.

REPORT FROM THE BOARD OF DIRECTORS / 12

Non-recurring charges amounted to a net € 1.0 million. These relate primarily to restructuring in Goods ID, to align the division with its software strategy.

Depreciation of fixed assets amounted to € 5.5 million, an increase due to the rise in long-term People ID contracts.

Value adjustments on inventory and trade receivables are in line with figures for the previous year. Amortization of capitalized development costs is up significantly at € 2.3 million, reflecting the efforts made in recent years by the Group.

EBIT reached € 9.8 million (€ 5.1 million in 2013), 65% of which was generated in the second half.

The tax rate was 33.0%, giving a total tax charge of € 3.1 million. The net result of the Group is € 6.2 million, up 82.4% on 2013.

Segment reporting Goods ID division 2013 closed during an uptrend, which continued throughout 2014. Order taking was good, with customers showing great interest in the Group's solutions.

In addition to the retail sector, which has historically been very important to Zetes, postal services and logistics exhibited strong interest in mobility solutions. This growth is spread over most European countries and supported by a small number of large projects in Belgium, England, Switzerland and Germany, especially within the retail sector. Certain major contracts were only partially implemented in 2014 and will continue to influence the division’s performance in 2015. In absolute terms, the division recorded a historic high (current EBITDA) of € 8.0 million in H2 2014.

Through specializing in its 6 solutions and by providing a unique service offering (life cycle management) for multinational corporations, Zetes is able to differentiate and to counter the impact of margin erosion on mobile terminals.

This is caused by the high concentration of equipment manufacturers and by competition from lower-end mobile terminals, which are cheaper and more fragile. Cost control linked to internal productivity gains is again allowing Zetes to improve its performance.

In general, interest in the 6 key solutions and especially for the mobility platform on which the different "market-specific" applications can be run continues.

The current EBITDA/sales ratio rose by 1.1% from 5.3% in 2013 to 6.4% in 2014.

Readers are reminded that this ratio was still at 4.3% in 2012.

€ 8.0 million EBITDA in H2 The highest in the history of Goods ID.

Exchange rates have had little overall impact at division level, with the unfavourable development of the South African rand-euro exchange rate offset by the favourable development of the GBPeuro rate. At constant exchange rates, revenue and gross profit both increased a further 0.2%. The impact on current EBITDA is around € 0.1 million.

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

REPORT FROM THE BOARD OF DIRECTORS / 13

People ID division If 2013 was marked by the winning of longterm contracts in Belgium (e-passport), Senegal (biometric visa) and Gambia (e-passport), as well as the pre-execution preparation work, 2014 is marked by the revenues these contracts generated. Zetes also benefited from its successful business development activity, with the delivery of a large batch of biometric registration kits to the Electoral Commission in Uganda (first half 2014) and preparation of electoral register in Togo (second half of 2014 and first half of 2015).

€ 17.1 million Cash flow from operations

Gross margin as a percentage of sales is logically lower, as electoral projects, with their high hardware component, carry a lower gross margin than long-term contracts. In absolute terms, however, gross margin is up very significantly at € 28.8 million (+ 24.7%). Operating expenses increased by 18.3%, with the implementation of new long-term contracts.

The People ID Division keeps a close watch for all market opportunities, and seeks to maintain strong geographical diversification and a good balance between long and short-term contracts.

The roll-out of ePassports contracts in Belgium (May 2014) and Gambia (December 2014) went ahead as planned.

These will generate revenues for the next 5 years at least. For these so-called "Build and Operate" contracts, Zetes needs to invest in development and in the IT and industrial infrastructure. Thereafter, the Company receives income each time a document is issued for the duration of the contract. These new contracts, along with the biometric visa contracts for Senegal and the Ivory Coast, structurally increase visibility of the future business revenues of the division.

The breakdown by half-year shows the impact of the different contract types on the division's income. If sales were significantly lower in the second half, gross margin was down just € 0.3 million in absolute terms. This is related to the impact of limited margin sales (delivery of hardware equipment) in the first half and the rising importance of long-term contracts, in particular with the start of Belgian passport personalization from

May 2014 (100% impact on the second half).

Current EBITDA as a percentage of sales was more than 20% in the second half (19.3% over the year), in line with the types of contract undertaken.

Corporate Division The cost of the Corporate Division amounted to € 3.7 million (+ 7.5% on 2013). Its missions continue to be strategy definition, financial control, marketing and acquisitions.

Goodwill As in 2013, there was no significant change in consolidation scope in 2014.

The only acquisition relates, in the second half, to the acquisition of assets and taking over of the team - a dozen people - of the company Rodata in Austria.

This acquisition generated limited additional goodwill of € 0.1 million.

Goodwill is therefore virtually unchanged from 2013, at € 40.0 million.

The Goodwill validation test (review of the recoverable value) did not reveal any insufficiency requiring the recording of an impairment.

Zetes also purchased 15% of the shares of Zetes Industries Israel for € 0.2 million.

This operation did not generate any additional goodwill.

Human resource management and environmental actions In 2014, the Group's workforce grew by 4.3% (+47 FTE). In Goods ID, the growth reflects the taking over of the Rodata team in Vienna (see above) and strengthening of the Software Factory, the entity in Barcelona responsible for developing the 6 solutions. In People ID, growth relates to the start of long-term contracts, with the division taking on an additional 16 employees (FTE). In total, the Group's workforce changed from 1,118 employees at the end of 2013 to 1,173 at the end of 2014.

Just like intellectual property, human resources constitute a key asset of the Group. Zetes takes care to make maximum use of the " business" knowledge and skills available throughout the Group, both in the Goods ID division (six key solutions) and in People ID. The company and its employees are aware of their civic responsibility in environmental matters and strive daily

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

REPORT FROM THE BOARD OF DIRECTORS / 14

added solutions. The division is of course sensitive to the investment decisions of its customers who are themselves affected by the economic climate and geopolitical uncertainties.

However, the share of recurring business has been steadily increasing over the past two years. Recurring business consists of maintenance contracts, the sale of consumables, and, since 2014, rental income from its solutions ("managed services"). Although they do not all contribute significantly to the Division’s total income yet, they carry a higher gross margin because they combine software created with services provided by Zetes.

Proposed dividend of € 0.63 Up 15%

In People ID, visibility increased on longterm contracts with the launch of the new ePassport and biometric visa projects.

In summary, following on from two successive years of growth, the Goods ID strategy coupled with structural income reinforcement in People ID should lead to higher results in 2015.

Research and development Development expenses in 2014 were € 2.6 million compared with € 2.8 million in 2013. These relate mainly to software development. Work on developing the 6 key solutions (Goods ID) will continue in 2015; the development costs here should be about the same as in 2014.

Branches

to implement responsible practices in this area, including limitations on travel, energy saving, waste sorting and the like.

Principal risks and uncertainties The Board of Directors presents its assessment of the risks to the Company in the 'Financial information and corporate governance' section of the annual report.

These risks relate to pending litigation, human resources, the environment, exceptional events, acquisitions, new products, technologies and fraud. The same notes also describe the Group’s exposure to prices, credit, liquidity and cash availability, foreign exchange and interest rate risks. To cover these risks, the Company has recourse to traditional financial instruments. It avoids

instruments, the complexity of which could compromise their transparency.

The instruments currently used are also described in the 'Financial information and Corporate Governance' part of the annual report.

Events after the closing date To date, there has been no specific postclosing event that influences the annual accounts submitted to the General Meeting.

Prospects for 2015 and description of the events that could significantly influence the company's development.

The Goods ID division benefited from strong growth in order taking in 2014 and continues its strategy of offering value-

Group activity is organized via local companies, which are either direct or indirect subsidiaries of Zetes Industries SA. Zetes Industries SA does, however, have a dormant branch in Ireland.

Statement on Corporate Governance The Statement on Corporate Governance is included in the 'Corporate Governance' section of the 2014 Annual Report. This Declaration includes, among other things, a description of the composition and modus operandi of the Board of Directors, the main features of the internal control and risk management systems, the composition and modus operandi of the Executive Management, the composition and modus operandi of the Committees within the Board of Directors, the remuneration policy, and the most recent remuneration report, and a description of

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

the shareholder base of Zetes Industries SA and its policy in terms of company capital, the measures taken by Zetes Industries SA to comply with Belgian rules on market abuse, the Group Code of Conduct and, lastly, dividend policy.

Conflicts of interest between directors and the Company The Board of Directors has not been required to make any decisions giving rise to the application of articles 523 or 524 of the Companies Code.

Related party transactions Related party transactions during the period under review consist essentially of the remuneration of the Executive Management (3 persons) by an amount of € 1,521,190. Transactions with companies linked to directors have been undertaken on an arm’s length basis. Details of related party transactions are included in the 'Financial Information and Corporate Governance' section of the annual report.

Article 74 of the law of 1 April 2007 The information relating to article 74 of the law of 1 April 2007 on public takeover bids is given in the Corporate Governance Declaration section (Shareholding Structure sub-section) of the annual report.

Issue of subscription rights In 2014, there was no issue of subscription rights. The powers of the Board of Directors to issue or repurchase shares are set out in Articles 6 and 7 of the company bylaws. Pursuant to the decision of the Extraordinary General Meeting of 28 May 2014, the Board of Directors decided, on 18 March 2015, to assign treasury shares in the event of exercise of options.

Own shares In the first half of 2014, Zetes Industries SA disposed of 38,550 own shares in the context of a staff incentive plan; in the second half, it purchased 71,164 shares at an average price of € 21.98. At 31 December 2014, Zetes Industries held 266,936 own shares, representing 4.95% of capital, for a par value of € 2.6 million. These shares are held for employee incentive schemes or business combinations by means of exchanges of shares.

REPORT FROM THE BOARD OF DIRECTORS / 15

Audit Committee

Statutory auditor’s report

At 31 December 2014, the Audit Committee consisted of four non-executive directors, two of whom have independent status:

The consolidated financial statements of the company have been audited

by RSM Réviseurs d’Entreprises Bedrijfsrevisoren, represented by Mr. Laurent Van der Linden and Mr. Thierry Dupont. The statutory auditor has informed us that he would give an unqualified opinion.

• G ema SPRL, represented by Mr. Michel Allé (Chairman of the Audit Committee, independent, nonexecutive director) • Mr. Paul Jacques (independent, nonexecutive director) • Mr. Hiram Claus (non-independent, non-executive director) • Floris Vansina BVBA, represented by Mr. Floris Vansina (non-independent, non-executive director) The independence of Mr. Paul Jacques (who is unrelated to Jean-François Jacques) and Mr. Michel Allé is guaranteed by the fact that none of them (or anyone with whom they are linked) holds more than 10% of the voting rights of Zetes Industries SA. Their competence derives from their education and their professional experience in the financial sector.

Proposed appropriation of the results of the Group parent company, Zetes Industries SA The statutory (unconsolidated) income statement of Zetes Industries SA shows sales of € 7.5 million (€ 5.7 million in 2013) and a net profit of € 4.6 million (€ 1.5 million in 2013). With equity of € 62.6 million (predividend), the company presents a very high solvency ratio of 96.2%. An abridged version of the statutory accounts of Zetes Industries SA is provided in the Annual Report (Financial Information section).

The Board of Directors will be proposing that the company pay an ordinary dividend of € 0.63 gross per share (giving a payout

€ 2.6 million of development expenditure Sustained effort

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

REPORT FROM THE BOARD OF DIRECTORS / 16

ratio of 51.7% of the consolidated net profit), payable after the Annual General Meeting. Taking into account the 266,936 treasury shares held on 31/12/2014, for which an unavailable reserve of â‚Ź 4.5 million has been established, the Board proposes to allocate the results of Zetes Industries SA, as detailed in the statutory annual accounts of the Company, as follows: Profit for appropriation Profit for the year available for appropriation Profit brought forward

4,605,545 4,600,507 5,038

Withdrawal from equity From capital and share premium account From reserves

0 0 0

Appropriation Transfer to legal reserve Appropriation to other reserves Gross dividend Profit to be carried forward

230,025 1,000,000 3,227,350 148,170

Discharge of directors and auditors It is proposed to grant discharge to the directors and the statutory auditor.

Brussels, April 1st 2015 For the Board of Directors.

Alain Wirtz SA Represented by Alain Wirtz Chief Executive Officer

Pierre Lambert Chief Financial Officer

Yellow surgeonfish feed on the algae and parasites that live on the shells of turtles, keeping them healthy and strong a shining example of how life can evolve in close collaboration.

In the same way, the different stakeholders in a supply chain can emerge as winners after working closely with their partners in Zetes' collaborative supply chain.

STRATEGY / 18

SYNERGIES AND SAFETY AT THE HEART OF VALUE CREATION In a group, success is never individual. For this reason Zetes has made effective collaboration, based on pooling the strengths of each and every employee, a primary agent of its success.

Zetes specializes in goods identification and people authentication. In Goods ID, its offering supports the supply chain, to which it brings a thorough understanding of computer systems to build bridges between the physical and digital worlds.

Its command of the processes involved makes Zetes a partner of choice for finding the best solution to a specific need.

In People ID, Zetes offers secure solutions for public authorities to correctly identify their populations and to meet the most stringent international requirements for the issuance of identity and travel documents and for organizing democratic elections.

Innovation and evolution through collaboration Collaboration is a key component of Zetes’ strategy. It is the driving force behind its innovation and growth, at several levels.

Internally, collaboration occurs between: • professionals from different sectors; • countries; • Goods ID and People ID. In 2014, mechanisms were introduced to strengthen the synergies between different teams within the Group.

Combining its experience in both Goods ID and People ID, its command of the most varied technologies in the field of identification and authentication, and operating via a network of subsidiaries, Zetes brings new solutions to the complex problems facing businesses and governments. This ability to innovate through dialogue has won it a unique position in the market and a solid financial footing.

Paul Rogers (Zetes in Ireland) and Liam O’ Sullivan (An Post) Collaborating since 2010

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

STRATEGY / 19

Traceability

IT complexity

Right Goods?

Right Goods?

Right Carrier?

Right Store?

Right Products?

Right ID?

Right Carrier?

Right Vehicle?

Right Time?

Right Shelf?

Right Info?

Zetes also seeks to replicate this internal way of working externally, by working closely with clients to fully understand their needs, and by encouraging exchange between customers and partners, especially within the Collaborative Supply Chain (CSC). Based on a model of data sharing, the CSC offers increased visibility of the movement of goods and allows all players involved to maximize their investments.

Combining its two divisions, Zetes takes a global approach. It is equally as able to work on small segments of the overall traceability or authentication process as it is taking in hand an entire project.

The value for the customer lies in the permanent availability of proven solutions, ease of management and security of its data.

Europe and Africa, two continents to identify Zetes concentrates its efforts on Europe and Africa.

In Goods ID, Zetes still sees many growth opportunities in Europe related to regulatory constraints, growing

traceability needs and the constant search for productivity gains. Its standardized approach allows it to expand into new markets quickly. As a result a new subsidiary has come into being in Austria and since 2014, Zetes has also been represented in Poland.

Rich in raw materials and with a booming manufacturing sector, Africa also presents fertile ground for the development of traceability. With rapidly growing and migrating populations, it is a market eager for people authentication solutions.

Ensuring data security Both large corporations and governments will consider contracting out the collection, management and safekeeping of confidential data provided they have total trust in their partner. Consequently, Zetes offers them all requisite guarantees for high security information management.

It has specialized in setting up sites for the production and personalization of secure identity and travel documents and holds several certificates attesting to its expertise in the field, including ISO 9001 and ISO 27001.

In both Goods ID and in People ID, security is present from one end of the chain to the other: spanning data capture, centralization, storage and retrieval, and document personalization.

Strategy levers Group solutions The solutions developed in-house are an essential component of Zetes’ strategy.

These allow a targeted approach by market and greater implementation flexibility.

Relationships of trust By being attentive to the needs of business and working closely with its customers, Zetes becomes a preferred technology partner. This confidence makes it possible to multiply the number of projects within one and the same organization, from different departments and with different solution types.

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

Enhancing of competences Customer contact and service quality are essential elements of the Group's success.

Our employees accumulate this in the way valuable experience is translated into Zetes’ solutions. This experience is a catalyst for team innovation.

STRATEGY / 20

/”Zetes' offering is uniquely

structured in the supply chain market and truly sets the Group apart from the pack.”

Stability Zetes, with its geographical and sectoral diversification and its solid financial structure, is a stable partner for customers and prospects that concern themselves with entrusting multi-annual projects or concessions to a society that is here to stay.

Goods ID: the Collaborative Supply Chain, a winning strategy In 2014 Zetes reaped the first results of its Collaborative Supply Chain strategy, launched in 2013 in response to the growing challenges facing companies confronted with increasingly stringent requirements of traceability, trade globalization and e-commerce. Zetes proposes a set of standardized solutions that meet the exponential growth of data.

This new approach offers customers standardization, consistency and cost rationalization.

Zetes' offering is uniquely structured in the supply chain market and truly sets the Group apart from the pack. This offering could not have come into being without the many investments made over the years, in both geographical and technological expansion and innovation. It is the outcome of pooling the Group's expert knowledge in various markets, countries and technologies.

In this way, Zetes offers a response that starts directly from the specific challenges of its customer sectors and not from technology, which is only one way among many of achieving productivity, error reduction and similar objectives.

People ID: a good mix of both contract models Over the years, Zetes has built up a bank of concession or Build and Operate (BO) contracts. These contracts, concluded for 5 to 10 year terms, call for a significant investment by Zetes in development and infrastructure, but in return offer good visibility of future cash flows because revenue is collected for each secure document issued. This model spares customers the risk of technological and industrial choices and ensures that their citizens receive highly secure documents.

These projects require the creation of a subsidiary company and the hiring of local staff, who can then be re-deployed for projects in other countries within the region.

2014 saw the start of biometric ePassport projects in Belgium and Gambia, both signed in 2013. Late in the year a new contract was also won in the Ivory Coast for producing of health cards. In the latter case, Zetes took advantage of the infrastructure already in place for

Didier Reynders visits the Belgian passport production site © Jean-Pol Schrauwen

passport production, a project it has undertaken for the Ivorian authorities since 2008.

For election-related projects, the sales model is "Build and Transfer". Zetes sells: • hardware solutions • software solutions and is responsible for : • the training of field operators • support and maintenance services throughout the life of the project • management and coordination.

These contracts are shorter-lived than BOs, usually lasting only a few months. In this case, Zetes sells the infrastructure on a turnkey basis to its client and provides the services. The contribution of "Build and Transfer" contracts to income is important, but less regular than of "Build and Operate" contracts. 2014 saw a good mix of both contract types.

Faced with major competitors in the authentication sector, Zetes relies on its excellent reputation, based on a growing number of successful projects, to increase its market share.

The oxpecker relieves deer of fleas, ticks and other unpleasant hosts. Perfect food for the bird and a relief to the mammal.

Collaboration is vital at Zetes too. By working together and exchanging experience and knowledge, we are able to offer unique and relevant solutions.

ACTIVITIES / 22

CONNECTING THE PHYSICAL AND DIGITAL WORLDS Goods identification and people authentication are two sides of the same coin. In both cases, Zetes' mission is to connect the physical world with the digital world of IT systems.

This two-pronged approach forms the basis of the Group's success.

Identification, authentication, digitization and traceability have become increasingly important in our societies. And with them, comes a need to secure the different aspects of our lives.

The proliferation of trade, the internet explosion, and increased human mobility are a reality and increasingly influencing our lives as well as making them more complex. Commercial organizations and governments are therefore looking for ways to streamline processes whilst obtaining the information they need to make good decisions.

By connecting the physical and digital worlds, Zetes' Goods ID and People ID solutions enable them to achieve these objectives, automating workflows and providing better visibility, via their IT systems, on the movement of goods and people.

For this, Zetes employs various technologies, maintaining a constant technology watch for developments that can most effectively solve the challenges facing its customers. Zetes has itself pioneered the use of these technologies many times, investing heavily over the years in research and development. In parallel, it has built up solid expertise in its customers' processes, enabling it to advise on the most appropriate optimization techniques.

By constantly establishing bridges between its divisions, Zetes has developed unique knowledge and expertise for each sector individually and also created convergences.

Most of our customers' investment decisions are taken in order to provide a better service to their own consumers and citizens. Ultimately, these stakeholders are equal beneficiaries of the solutions Zetes develops.

Enterprise applications ERP/WMS/TMS

Goods

Wired & wireless networks

Front end communication Complementary application logic

National register AFIS system

People

Physical

Digital

Identification & data capture

Host system integration

(Secure) data communication

ACTIVITIES / 23

GOODS ID

Globalization, the concentration of production and outsourcing, have made the supply chain more complex by greatly multiplying the number of different flows.

Historically, products were predominantly consumed in close proximity to their place of production. Today, they travel around the world at great speed. Health risks are multiplied with the use of ever more complex ingredients, some of them genetically modified and introduced into the food chain more and more quickly.

For this reason traceability is a nonnegotiable requirement, demanded by today’s consumer.

The collaborative supply chain: a unique differentiator

4 cornerstones for consistency and flexibility When implementing each solution, Zetes takes a four-staged approach, to provide customers with the best solutions using the most productive and efficient processes:

/"When implementing each

solution, Zetes takes a fourstep approach, providing customers with the best solutions using the most productive and efficient processes."

1. The business process

Our customers' processes are the starting point for any project. Even if these processes are 80% similar from one company to another, allowing us to address them with standardized solutions, each customer also has its specificities with unique issues requiring a specific analysis and response.

2. Execution solutions

Based on its long experience of the supply chain and to meet current business needs, Zetes has introduced a suite of standardized solutions that target the issues specific to each stakeholder.

These solutions improve performance, making them more competitive in terms of productivity and helping them comply with legislation on traceability and counterfeiting.

The execution solutions reflect the business processes, building an operators’ in-the-field actions into an IT solution which is integrated with central back office systems.

This involves coding and developing applications that permit the smooth running of routine operations like order processing, delivery, or inventory management.

The Zetes collaborative supply chain is a distillation of the experience of different specialists in different territories. The current trend towards standardization meets a need for simplification, cost rationalization and globalization of trade. Companies with subsidiaries in several countries increasingly wish to adopt a pragmatic, rational approach to solution management. With standardized solutions, they can offer a consistent, proven approach, implemented by local expert teams.

3. Technological integration

Each link in the supply chain finds an answer to its particular needs through Zetes. Building a centralized database also serves to interlink all stakeholders in the chain.

4. System integration

The choice of identification and data capture technology is an important one, as it can significantly impact the cost and internal reorganization of business processes. This choice calls for careful analysis of the environment and the client's individual needs and priorities in terms of expected gains. In every case, the technologies proposed by Zetes reflect particular operational constraints and the search for productivity and quality.

Our solutions integrate seamlessly with any system chosen by the customer, whether transportation management systems (TMS), warehouse management systems (WMS), or enterprise management systems. Zetes’ solutions can also interface with, amongst others, Business Intelligence tools, route planning, and point of sale (POS) systems.

Management of applications in the cloud In recent years, the concept of cloud has made its debut in companies and is becoming increasingly popular. This is due to the application management functionalities this system offers and the fact that it allows companies to reduce their capital expenditure. The model is, however, still in the early stages of development in supply chain environments. Unlike an office environment, operators work with mobile terminals and internet connectivity is not always assured. This requires a tool adapted to satisfying these different needs yet delivering the same benefits, which is what the MCLTM mobility platform achieves.

This platform is marketed with several Zetes solutions, enabling customers to reduce their IT infrastructure costs and simplify application management.

A rapidly evolving logistics chain The "collaborative supply chain" strategy is beginning to bear fruit and largely responsible for growth in the Goods ID Division in 2014. There is real business interest in the Group's solutions, which respond perfectly to the sector’s changing realities. And demand for this type of solution is set to grow strongly.

In addition to the retail sector, which is historically very important to Zetes, postal services and logistics are both showing strong interest in mobility solutions.

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

Identification and traceability needs are changing, particularly in terms of security, legislation, brand protection and multiplication of sales channels. These changes are marked by a growing desire to protect and satisfy consumers, who are increasingly particular about the origin and quality of the products they buy. At the same time, public authorities are imposing increasingly stringent regulations, which affect the pharmaceuticals, luxury goods and food sectors in particular.

/“Identification and

traceability needs are changing, particularly in terms of security, legislation, brand protection and multiplication of sales channels. "

The evolution of e-commerce is also impacting Zetes' activity, with companies active in or entering this sector needing to reorganize their logistics processes from delivering large quantities of goods to a small number of customers, to distributing small quantities of goods to a diverse customer base consisting of a large number of individuals. The ability to effectively manage these processes, and in particular product returns, is a challenge which, if addressed properly, offers customers major competitive advantages. The growth of e-commerce is expected to continue over the next few years, presenting further opportunities for solutions like ZetesMedea and ZetesChronos.

A solid partner Companies are seeking partners with the technical and human resources to support them in projects that are of crucial importance for their organizations. In a market that remains highly fragmented, Zetes provides: • The critical size required for the deployment of large-scale projects; • A solid financial foundation enabling it to make significant investments, particularly in infrastructure;

ACTIVITIES / 24

• A network of subsidiaries across EMEA able to accompany international projects for customers requiring homogeneity of IT solutions and equipment fleets. Zetes' presence in both Europe and Africa is a big advantage for companies active on both continents, with the Group able to offer the same level of service everywhere.

In the highly fragmented automatic identification market, Zetes is the only company that can provide this level of service, an approach that has earned it several major contracts.

Prospects Today, Zetes' efforts are mainly focused on the adoption of the "collaborative supply chain" strategy and its correct implementation via subsidiaries, in particular through the development of adequate distribution and trading structures.

At the same time the Group remains alert to acquisition opportunities.

Geographically, once properly established, the model can be replicated easily by new companies entering the Group. Technology acquisitions have, in turn, the potential to evolve the existing

Direct presence in Goods ID and People ID

portfolio. The fact is that Zetes needs to be constantly developing and improving its solutions to offer customers what they require and remain at the forefront of technology. With its size and financial solidity, Zetes can dedicate international teams to developing solutions that meet the needs of its markets and therefore remain a step ahead of the competition.

/"Zetes is constantly

developing and improving its solutions to offer customers what they require and remain at the forefront of technology."

Zetes' task is to adapt its solutions to meet the requirements of its customers so that they in turn can comply with increasingly strict requirements.

ACTIVITIES / 25

Zetes' approach WMS/ERP/TMS Integration Zetes is a specialist in integrating software and hardware with all leading information systems.

Business Consultancy Services Traceability

Perfect Order

Perfect Delivery

In-store Management

Business Consultants deliver trusted, specialist advice to solve your specific demands and deliver a total solution.

Collaborative, end-to-end supply chain execution solutions Management of packaging ID processes

Optimisation from Goods-In to Dock Door

Full visibility over delivery processes

Shelf and order availability in omni-channel

FASE A

Our core solutions link the digital world of information systems and the process execution in the field. Each solution is tailored to answer specific challenges within the supply chain. All solutions can be interlinked to provide end-to-end traceability. packaging execution

barcode

direct store delivery

RFID

wireless

image id

Mobile Enterprise Application Platform

Build

Deploy

Run

Manage

Windows Android

security

cloud

multimodal

Users Apps Devices

Cloud

control

quality

With the MCL Mobility Platform™, customers can build, deploy, run and manage apps and infrastructure from virtually anywhere.

Barcode

Mobile terminal

RFID

Voice terminal

Datamatrix

Tablet

Databar

RFID gate

Voice

Camera

Multimodal

ImageID

Mobile printer

Infrastructure

Hardware

Technology

Integrated and proven technologies & infrastructure

Wireless

Forklift terminal

All solutions integrate best of breed technology and run on all leading hardware and OS platforms.

Lifecycle management services

TotalCare Managed Services

Total Finance

Total Infra

SaaS, PaaS, IaaS

All solutions are powered by services that ensure easy management, maximum uptime and lowest TCO.

Consumables & Ancillaries

ACTIVITIES / 26

ZETESATLAS

IDENTIFICATION AND TRACEABILITY OF PRODUCTS ON THE PACKAGING LINE

ZetesAtlas is a packaging execution system (PES) that manages, secures and improves the process of identifying products at the packaging stage.

Counterfeiting and consumer safety

Full control of the packaging line

Traceability is certainly a watch word for many production companies, necessary to both combat counterfeiting and ensure a quality product reaches the end consumer. Given the scandals of recent years, mainly in the food sector, but also a growing concern among consumers about the environmental impact of the products they buy, a growing number of regulations are coming into force and companies must find ways to comply. Where problems persist, it is imperative to organize the quick and efficient return of affected goods. Opportunities for ZetesAtlas are plentiful, since a significant number of companies are still looking for solutions to meet these traceability issues, barely a decade old.

ZetesAtlas is the key link between ERP and product identification stations. The solution manages both the execution of the data and monitoring them in real time.

These are the sine qua non for building a reliable and efficient repository.

Moreover, 90% of production sector companies are not yet aware of the benefits that an integrated packaging line identification solution can bring. In addition, these companies are increasingly seeking solutions to provide identification at the individual item level. This calls for a high-level solution, capable of managing both data and events.

The primary sectors potentially interested in such solutions are pharmaceuticals, cosmetics, chemicals and food and beverages. Other sectors too have expressed interest.

The ZetesAtlas solution interfaces with the user's ERP system and manages product marking tools at the end of production lines. This approach greatly limits manual intervention and significantly reduces the number of errors. With ZetesAtlas, a single operator configures all printers, placing robots and the control cameras used for identifying and aggregating individual products: which products are in which box, which boxes on which palette. Aggregation of data from one packaging level to another is essential for effective traceability. ZetesAtlas is also able to support serialization, i.e product identification at the unit level rather than by lot.

In combination with ZetesOlympus, which creates an information repository by providing an interface to business partners (customers and suppliers), ZetesAtlas forms the basis for optimum visibility on movements and product authentication.

A solution of particular interest to the food processing sector

ACTIVITIES / 27

ZETESMEDEA

OPTIMIZING WAREHOUSE PROCESSES

ZetesMedea is a logistics execution system that enhances the efficiency of warehouse processes.

It helps reduce costs by ensuring error-free execution of operations; and provides real-time visibility of warehouse events by integrating advanced technologies such as voice and machine vision (ImageID).

A highly competitive sector

Visibility from reception to shipping

Operating under heavy economic pressure, most companies’ primary objective is to ensure high levels of productivity while compressing costs to a minimum. To do this, they are looking for advanced process automation, allowing them to operate at higher speeds and with minimal errors. Correct and timely deliveries are a determining factor in the choice of supplier.

Zetes was a pioneer in the introduction of voice in the warehouse and has since successfully extended the technology to other applications like order preparation.

Voice is, for ZetesMedea, the solution that still presents the most opportunities.

The development of e-commerce also presents growth opportunities for ZetesMedea. A dedicated e-commerce distribution warehouse is organized very differently to a traditional one, given the specificities of supplying a greater number of customers with smaller quantities of products. Given its success in specific e-commerce environments, the ZetesMedea logistics execution solution is beginning to overlap with the logistics execution process in retail stores covered

by ZetesAthena.

The solution is of interest primarily to supermarkets, traditional food processors and companies involved with e-commerce.

Zetes pioneered the introduction of voice in the warehouse

Based on the MCL Voice system, the ZetesMedea Voice solution is a high performance system, which eliminates the need for operator training or recording voice profiles. Instead operators can start working immediately. Moreover, unlike other voice technologies, MCL Voice offers a choice of hardware providers and makes it possible to combine voice with other data capture technologies.

Other techniques, like RFID, barcode and Image ID technology (machine vision) are available within ZetesMedea, and can be combined to create the most suitable solution to the process requiring support.

The ability to manage the full range of warehouse processes is a key plus for Zetes, enabling the user to track products from the point of entry into the warehouse until they leave. In addition, integrating ZetesMedea with the ZetesOlympus repository allows customers to trace all events during the product life cycle.

ACTIVITIES / 28

ZETESCHRONOS

FOR A PERFECT DELIVERY

ZetesChronos is an advanced Proof of Delivery (POD) system, designed to monitor the entire collection and delivery process, offering real-time visibility of the movement of goods and operator activity in the field, from loading through to delivery, and guaranteeing traceability at all stages of the delivery process.

A sector under increasing pressure

The new generation POD

The transport sector needs to adapt to a changing market, with increasing pressure to reduce costs, comply with different regulations and to meet the requirements of increasingly demanding customers. This calls for working methods adapted to all players involved in the delivery process: drivers, shippers, management, customer services, etc.

For most companies, regardless of their type, the majority of processes are organized in the same way. However, for each customer, there will be features in the delivery process that will enable them to distinguish themselves from the competition. For them to get the most from their approaches, any POD (Proof of Delivery) solution must be both standard and agile. Standard in order to provide a solid and proven base. Agile to be able to adapt quickly and flexibly to the changing demands of industry.

In order to stay competitive in this environment, transport and shipping companies must not only perform complete deliveries on time, but also offer value-added services, ensuring end-to-end visibility and traceability and responding flexibly and proactively in all circumstances.

Proof of delivery solutions are of particular interest to postal services, parcel delivery and courier services, supermarkets, logistics service providers, as well as wholesalers.

ZetesChronos is designed to control all collection and delivery processes

ZetesChronos provides this agility and stability using a framework that integrates perfectly with existing backend systems such as TMS or planning software.

Managed by the MCL™ mobility platform, terminal applications can be managed and deployed centrally, regardless of terminal device manufacturer and operating system.

We see interesting opportunities for ZetesChronos in retail and wholesale, where many companies are still working on paper, and in the postal sector, where many are already equipped with mobile solutions but are nonetheless ready to commit to a ‘next generation’ approach.

ACTIVITIES / 29

ZETESARES

IMPROVING SALES THROUGH DIRECT STORE DELIVERY

ZetesAres is a complete Direct Store Delivery solution designed to increase sales through better customer management. It includes orders, sales, delivery, asset management and maintenance, transforming sales reps into highly efficient, reliable advisors who can sell the right product, at the right place, at the right time.

Selling more and better

Ergonomics and ease of management

Marketing is one of the main factors that could cause companies to opt for direct instore selling solutions, with professional presentation of products in order to enhance brand image. Companies are also keen to offer a better service to their customers in order to be more competitive and increase sales.

ZetesAres is used on tablets, which allows for easy access to product information and a visually pleasing and ergonomic layout. With all applications combined on a single terminal, it is possible to close a sale faster and calculate what stock is still available in the van quickly

In the cosmetics sector, a direct in-store selling solution also helps counter black market sales by improving control over distribution channels. It is also relevant for niche businesses in the food industry, which face strong competition and need the ability to differentiate.

Professional presentation of products enhances brand image

Like ZetesChronos, ZetesAres uses the MCLTM mobility platform, but its particular stength lies in its many features. In addition, as one of the solutions in the "collaborative supply chain" portfolio, it can integrate with other links in the supply chain including ZetesAtlas, which effectively combats counterfeiting.

ACTIVITIES / 30

ZETESATHENA

INTELLIGENT IN-STORE MANAGEMENT

ZetesAthena is a modular mobile store management solution for the creation, storage and deployment of dematerialized (cloud) in-store management applications. From reception to inventory, from re-pricing to replenishment, from access to product information, to click & collect, data management is centralized, simplified and does not require heavy investment.

Application management difficulties faced by multinationals

Reduced investments and improved manageability

Here again, new shopping habits are strongly influencing companies' technology buying decisions. Consumers are increasingly knowledgeable, using a growing number of channels to check the price and availability of products before purchasing. This means, first, that brands need to offer multiple distribution channels; secondly, that they must have perfect visibility of stock levels, both in the branch consulted and others (in order to possibly redirect the customer); and thirdly, that they need the ability to quickly review product information. Avoiding lost sales due to out-of-stock problems is a major challenge.

There are many solutions available for improving store processes and generally each one has very similar features.

Zetes’ differentiator is its MCL™ mobility platform. This is especially appealing for retail chains with a large number of stores to manage, especially in the clothing and luxury goods sectors and airport shops, enabling them to minimize the level of IT investment required at each point of sale.

The multiplication of distribution channels therefore requires a very precise management of inventory, but also of shipments and returns. Many brands fold daily for lack of processes adapted to this new reality.

Here too, strong competition and the economic environment are pushing companies to find ways to reduce their investments.

ZetesAthena customers also come out ahead in terms of the time employees spend dealing directly with customers, rather than on administrative and technical tasks. The solution also allows a more fluid exchange of information between the different branches of the same brand, including the availability of goods in stock.

In combination with ZetesMedea and ZetesChronos, ZetesAthena offers a perfect solution to managing processes affected by the multiplication of distribution channels.

ZetesAthena streamlines information exchange between different branches of the same brand

ZETESOLYMPUS

ACTIVITIES / 31

END-TO-END TRACEABILITY AND VISIBILITY FROM PRODUCTION TO CONSUMER

ZetesOlympus is the central component of the Zetes Collaborative Supply Chain suite.

Acting as a unified Data Execution Event Platform (DEEP), it can be interfaced with various internal and external company information sources. This means that product information can be captured at any time, for any given unique ID, charting its history at any time in a process: i.e. ‘when, where and with whom’. ZetesOlympus enables the various supply chain stakeholders to access, manage and control data and processes collaboratively, via a centralized location.

Supply Chain Track & Trace: protecting brand image and regulatory compliance

Supply Chain visibility: Total visibility and guarantee of commitments

Opportunities for Track and Trace are strongly linked to serialization and data aggregation. They begin at packaging line management with ZetesAtlas. The main purpose of ZetesOlympus is to ensure better traceability within the supply chain up to the point of consumption by authenticating the product. All stakeholders have access to selected information, with the manufacturer usually the initiator and greatest beneficiary. Any issue of product quality or counterfeiting puts its brand image at risk. A data execution event platform allows it to track goods and interact with consumers using up-to-date identification technologies.

In the supply chain field, Zetes is the only provider offering a range of solutions that a) simultaneously enhances the processes of each individual link with the most efficient technology, and b) enables the various stakeholders to collaborate by sharing essential information on a unique ID. This visibility of product and container movements is crucial for all sectors that have complex supply chains, are committed to tight global delivery deadlines, and need real-time information to make decisions and ensure results.

Better traçability through data sharing between the links of the supply chain

ACTIVITIES / 32

THE MCL™ MOBILITY PLATFORM

THE BASIS OF MOBILITY MANAGEMENT FOR THE SUPPLY CHAIN

The MCL™ mobility platform is a cloud-based Mobile Enterprise Application Platform (MEAP), entirely dedicated to supply chain process execution. It offers customers a new way to overcome the increasing complexity associated with managing mobile applications and infrastructure, including development, deployment and maintenance, each of which are time-consuming and expensive processes.

A unique approach to MEAP

• Cloud-based, pay-as-you-go solution: available as a SaaS, the platform obviates the need to invest in expensive IT infrastructure. It is also scalable and gives perfect cost visibility.

• Full lifecycle support: the platform permits pro-active management and monitoring of apps and devices to guarantee optimal performance.

With the platform, customers can build, deploy, run and manage mobile applications faster and from virtually anywhere, regardless of operating system or mobile device. The MCL™ mobility platform is unique in combining two features that create unrivalled synergy for Zetes’ customers. These are: its exclusive dedication to improving supply chain process execution, and its ability to manage the entire mobile infrastructure, including applications and devices. This enables a 'build once, deploy to many' approach.

Dedicated to the supply chain The MCL™ mobility platform offers a wide range of standard and ready-to-use supply chain management functionality.This facilitates and significantly accelerates the building, enhancement and maintenance of applications, permitting rapid access to all device functionalities.

Supply chain stakeholders can now manage applications from warehouse to retail outlet from a single platform.

Managing the entire mobile lifecycle Using the platform, customers can manage their entire mobile infrastructure, from building and/or enhancement, deployment and integration, right through to the management of applications, devices and users. This all-in-one platform futureproofs the mobile business through the following key features: • Multi-platform and deviceindependent: applications are developed once and then deployed to as many devices as needed, regardless of operating system or device type.

• Centralized management: applications, users and devices are managed centrally from virtually anywhere. This reduces the need for complex IT infrastructure and facilitates the management of heterogeneous and geographically dispersed estates.

��

�

1

2

3

4

5

6

7

8

9

# 0 * � � �

Application Store

Central IT Dept

App/SW Deployment

Device Management

User Management

Data Storage

MCL™ Mobility Platform

�

6

2 1

9

5

4

*

8

7

�

0

#

�

�

��

3

�

6

2 1

9

5

4

*

8

7

�

0

#

�

�

��

3

�

6

2 1

9

5

4

*

8

7

�

0

#

�

�

��

3

�

6

2 1

9

5

4

*

8

7

�

0

#

�

�

��

3

�

2

6

��

1

9

5

4

*

8

7

�

0

#

�

�

2

6

��

1

5

9 *

8

7

�

0

#

�

�

4

3

�

3

�

6

2 1

9

5

4

*

8

7

�

0

#

�

�

��

3

�

6

2 1

9

5

4

*

8

7

�

0

#

�

�

��

3

�

6

2 1

9

5

4

*

8

7

�

0

#

�

�

��

3

�

6

2 1

9

5

4

*

8

7

�

0

#

�

�

��

3

�

2

6

��

1

9

5

4

*

8

7

�

0

#

�

�

2

6

��

1

5

9 *

8

7

�

0

#

�

�

4

3

�

DC

3

�

3 2

6

��

1

9

5

4

*

8

7

�

0

#

�

�

6

2 1

9

5

4

*

8

7

�

0

#

�

��

3

�

DC

�

6

2 1

9

5

4

*

8

7

�

0

#

�

�

��

3

�

DC

ACTIVITIES / 33

PEOPLE ID

The authentication of persons and the production of identity documents have undergone great changes in recent decades, with the intensification of human displacement, including migration flows, calling for solutions permitting better visibility on people movement. At the same time an increasingly connected world is calling for solutions that authorize the automated exchange of information, not only between citizens and government authorities, but also between the authorities of different countries. Added to this is the need for governments around the world to organize democratic and transparent elections. These developments call for increasingly accurate and secure identity management, which in turn demands perfect IT infrastructures and forgery-proof documents. In fact, the main challenges facing states in the authentication arena are identity theft and counterfeiting.

A comprehensive portfolio of innovative solutions

Zetes attributes the ongoing success of its People ID division to a comprehensive product and service offering, ranging from live citizen enrolment to the issuance of identity documents (see diagram p36).

The breadth of its offering enables states to entrust the implementation of highly complex projects to a single supplier.

In recent years, Zetes has added a fixed biometric enrolment station and an e-gate for automated border control to its range. It has also updated its mobile enrolment kit, as used in electoral census operations, the main advantages of which are ease of use and greater autonomy.

ABIS (Automatic Identification Biometric System) systems, which can detect duplicates in databases established from voter registration operations, occupy a central place in the Group's offering. Zetes has extensive experience in the field, with about 20 projects successfully completed within allotted budgets and deadlines.

In this way, Zetes’ offering meets the needs of states and governments, for whom an accurate view of the populations residing in or passing through their territories is essential, including and in particular for:

Zetes is a pioneer in the authentication sector. In just over 15 years, it has developed advanced solutions and processes for unequivocally authenticating citizens, civil servants and election officials, with particular attention paid to ensuring the security and protection of information.

The company's most achievements include:

innovative

• the first large-scale deployment of electronic identity cards in Belgium in 2005; • a world first with the biometric census of more than 25 million Congolese voters in 2006; • the introduction and management of the Ivorian biometric passport providing unsurpassed levels of security with live biographical and biometric recording, in 2008; • the introduction and management of the Gambian passport with simultaneous integration of biometric iris and fingerprint information, in 2013.

Biometric enrolment in the context of elections in Togo

• • • •

organizing democratic elections controlling migration flows administrative management human resource management (e.g. civil servants, police, military personnel).

The proposed solutions also satisfy the strict requirements of international organizations such as ICAO (International Civil Aviation Organization) and IATA (International Air Transport Association).

Security first for citizen data Person identification touches on the sensitive topics of privacy and confidentiality. It is therefore imperative to provide maximum assurances of security both in the management of data and in the documents themselves.

This translates into several measures: • "Live enrolment": based on fixed and/ or mobile kits, Zetes’ solutions ensure 'in one place and once only' enrolment when collecting biographic and biometric information.

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

ACTIVITIES / 34

• Data encryption, both during the transfer of information and by restricting access to certain data contained in a document to its owner only.

• The use of advanced materials and techniques in document production to ensure non-reproducibility.

• Secure management of sensitive information, guaranteed by ISO 27001 certification.

Zetes continuously invests in this area to ensure authorities and citizens of the highest degree of data protection.

/"Person identification

touches on the sensitive topics of privacy and confidentiality. It is therefore imperative to provide guarantees of security. "

Success built on an excellent reputation

/"In People ID, Zetes is

In its home country Belgium, Zetes manages the issuance of national electronic identity cards, identity cards for foreigners, the Kids-ID, e-passport and driving licence. These successful projects in Belgium have allowed Zetes to expand elsewhere in EMEA. This area is a priority for Zetes because demand in Europe and especially in Africa is very large. It has invested sizeable resources in business development, and sales cycles are long and require sustained effort. Zetes is also involved in the production of electronic identity cards for Israel and Portugal.

Furthermore, Zetes is very active in Africa; with many African states keen to strengthen their national registers as a strategic part of their development policy.

Africa's leaders have understood the value of biometrics for strong authentication of their citizens.

very active on the African continent, where many states want to strengthen their national registers."

Zetes has deployed its solutions in the Democratic Republic of Congo, Côte d'Ivoire, Togo, Burundi, Gabon, Cape Verde, Benin, Chad, Israel, and Sierra Leone. The company's good reputation is based on the success of these projects.

This accumulation of customer references is essential in developing the business and guarantees divisional growth.

The majority of bids for identity and travel documents require major certification and references. Zetes is therefore well positioned to continue its advance.

CONTROL OF THE DUPLICATES

AFIS

CENTRALIZATION

ENROLMENT

DATA CENTRALIZATION

VOTERS' LIST

VOTER'S CARD

ZETES' TECHNICAL RESPONSIBILITY AREA ELECTORAL COMMISSION RESPONSIBILITY AREA

POLLING STATION

COUNTING OF VOTES

RESULTS

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

ACTIVITIES / 35

Excellent visibility of long-term contracts

Zetes has, to date, more than 10 BOT projects underway in Belgium, Israel, Portugal, Ivory Coast and Gambia.

Zetes’ People ID business model is based on 'Build & Operate' (BO) and 'Build & Transfer' (BT) contracts.

/"To be able to offer such

• Build & Operate

Customizing the Belgian passport After originally winning the public contract initiated by the Federal Public Service (FPS) Foreign Affairs in August 2013, Zetes began work on 5th May 2014, with the personalization of the new Belgian electronic passports.

This task was inaugurated with a visit

by Deputy Prime Minister and Minister of Foreign Affairs, Foreign Trade and European Affairs Didier Reynders, to the Group's high security production and personalization site.

This 5-year project Build and Operate contract is based on processes that have extensively proven their worth in similar projects and on a secure IT infrastructure.

Nearly 400,000 passports will be personalized every year. Zetes is also responsible for the distribution of passports to the authorities.

By including this last link, Zetes reinforces the ‘water-tight’ nature of the entire process and further reduces the risk of theft or fraud.

Particular emphasis is placed on the quality of the passport photograph, as in 80% of cases it is this parameter that counterfeiters tamper with. This photo is therefore reproduced in multiple places in the document.

BO is Zetes’ business model of choice for government contracts involving the issuance of identity and travel documents.

The authorities concede the production and/or customization of these documents to Zetes for a period of 5 to 10 years or more. This enables Zetes to make the necessary investment in a local infrastructure, local job creation for the country and in knowledge transfer.

Employees will be trained and can benefit from Zetes' experience for bringing the new site into operation.

No initial investment by governments To determine the price per document, Zetes undertakes an inventory of all the elements necessary for project implementation, i.e. buildings, security, machinery, equipment, software, services and logistics.

It also evaluates the operational costs for hiring and training of operators and the cost of know-how transfer.

Zetes also bears the entire infrastructure implementation costs. Governments do not need to make any initial investment (capex). According to client requests, a BO model can be finalized at the end of the contract period, by transferring all the hardware and software components to the authorities. This is known as BOT (Build, Operate & Transfer).

Financial strength of the provider To be able to offer such a model, which is still relatively unique to Zetes, a company must have a sound financial base. As a listed company, Zetes' financial management is transparent and the company has the funds to support such investments in foreign countries. It derives its income directly from the sale of e-documents to citizens. The viability of a project is determined by the length of the contract (minimum 5 years) and estimated number of e-documents to be issued each year within the set time period.

a model, which is still relatively unique to Zetes, a company must have a sound financial basis. "

• Build & Transfer In a BT scenario, the authorities engage Zetes to execute a project over a short period of time, usually a few months.

This type of contract is very common for biometric enrolment of voters, military personnel and civil servants.

In this model, Zetes delivers: • hardware and software components • deployment • support and services • project management • operator training • technician training.

The government is usually in charge of field operations and operator payments.

Unlike the BOT model, BT requires an initial investment by the government, for a service usually delivered to its citizens.

ACTIVITIES / 36

Zetes' approach

Enrolment At this initial stage, the biographical and/or biometric data of each person to be identified are recorded with the aid of fixed or mobile identification stations.

Centralisation Once personal data has been recorded, it is centralised in a single, structured database. The data is transferred in an encrypted manner via satellite communication, the Internet, or digital media.

Database / national register Once all the data has been verified, a reliable database is available that, if necessary, can be used to prepare a population register. A register of this sort is still currently lacking in many countries.

ABIS Thanks to a high-performance information checking system (ABIS or Automated Biometric Identification System), Zetes searches for duplicate entries.

If the system finds that identical biographical and/ or biometrical details exist more than once, an alarm is raised and the identities of the people involved are verified.

Production / personalisation The verified data can also be used to produce and/or personalise secured documents. These documents include electronic ID cards, biometric electronic passports, visas, driving licences, voter cards and social security cards.

Document delivery When handing over the document, a civil servant re-checks the citizen's biometric data. If the document contains encrypted data, the citizen will have previously received a PIN code which, for increased security, may be changed at the time of delivery.

Online applications The electronic identity card allows remote identification on the Internet, giving access to a number of applications and secure portals. These can be private or public, such as electronic signing of documents or tax returns in Belgium.

Control The information gathered is verified against the existing database. The implementation of biometry and ABIS allow the detection of fraudulent individuals attempting to present themselves under a false identity.

The elephant and the cattle egret are very close friends. The egret rids the elephant of parasites and feeds from them.

He also quickly informs him of any danger. It is a natural collaboration which inspires the Goods ID and People ID divisions of Zetes, as they mutually learn and benefit from each other's innovations and experiences.

CREATING EMULATION TO STAY AHEAD OF THE PACK Investing in R&D is essential for remaining a leader in one's market.

With the most relevant innovations often born through collaboration of experts from different backgrounds, Zetes creates the organisational structures to stimulate this dynamic.

Innovation is essential to the performance and continuing existence of a company like Zetes. With rapidly changing technology, no idea stays new for long. Zetes therefore needs to invest continually to maintain its competitive advantage.

To encourage innovation, Zetes firmly believes in and promotes exchange and collaboration.

This approach has led to the standardization of its Goods ID solutions, the development of tools like the MCL™

The supply chain enjoys the benefits of the Cloud, hard to access in a mobile environment until now.

INNOVATION / 38

mobility platform, and new products and solutions in People ID. Innovation at Zetes is an evolutionary process rather than one of radical new developments.

Our customers' processes are often very complex, and have evolved over many years. Their good functioning is of critical importance to their organization.

Zetes uses technology to try to improve these processes without fundamentally questioning them.

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

The MCL™ mobility platform: the basis of mobility management for the supply chain To support its collaborative supply chain concept, Zetes has developed the MCL™ mobility platform, a cornerstone of its Goods ID offering. MCL™ is a MEAP or Mobile Enterprise Application Platform.

Facilitating the management of all terminal devices of the same company, it enables it to offer supply chain players all the inherent advantages of the Cloud, until now difficult to access in a mobile environment, first because mobile computing is more complex than fixed computing and, second because of a number of specific infrastructure problems.

Managing mobile infrastructures for such companies is a complex headache, which Zetes' MCL™ mobility platform sets out to cure.

INNOVATION / 39

Like the "collaborative supply chain" approach, the MCL™ platform is a major differentiator for the Group. Its advantages are mainly evident in Goods ID, but equally important potential applications exist in People ID.

The "Software as a Service" (SaaS) model The MCL™ platform's architecture as a cloud application enables Zetes to market its solutions using a subscription model (Software as a Service or SaaS) with optimized versions for each customer's particular IT infrastructure. Centralized management also offers significant time savings in the development of solutions.

The usual advantages of an SaaS offering are reduced capex and TCO, scalability, ease of use, including maintenance, automatic updates, centralized and protected data, and resilience.

/"MCL™ is a mobile

application platform for companies and a cornerstone of the Goods ID offering."

Unlike other mobility software, the MCL™ platform goes far beyond the parameterization and management of mobile devices. Focused on mobile applications and all operational aspects of mobility, it greatly simplifies multisite deployment, adding new users, and updating applications, all habitual sources of error.

Standardization on the MCL™ platform across the Zetes Group brings a number of advantages both for customers and for Zetes subsidiaries themselves. The latter can focus more on the functional aspects of the solutions while guaranteeing their compatibility with different operating systems. For customers, access to the MCL™ platform allows them to manage their installed bases centrally and obtain practical information on the operation of their terminals.

The Software Factory in the Research Park of Barcelona Autonomous University

The Software Factory: a structured approach To support developments around the collaborative supply chain, Zetes has optimized its internal structure to promote the exchange of knowledge and experience. Since 2014, the Software Factory has been in charge of developing standardized solutions, which are pre-defined by the "Business Solution Groups". Composed of Zetes experts from different countries, these have already made it possible to pool the expertise distributed across the group and to ensure a coordinated approach to each vertical market. The Software Factory in turn provides consistency by: • maximizing reuse of code modules • ensuring full compatibility between solutions • ensuring the same technology and architecture is used across the group • reducing implementation risk.

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

The Software Factory builds on the expertise that Zetes has harvested project by project in each country. This interaction then allows Zetes to adopt and standardize new requests coming directly from clients.

This networking approach offers many other advantages: • accelerated adoption of new trends • rapid sharing of new features and functionalities between different solutions • effective technical support for local deployments • sharing extends beyond codes to include related resources (i.e. documentation, translations, etc.).

INNOVATION / 40

eaZySign: an electronic documents signing platform New product launches in 2014 included eaZySign, an online electronic documents authentication platform. eaZySign serves to sign official electronic documents in a legally valid, safe and user-friendly way,

Collaboration with academia In the context of the Software Factory and in order to remain at the forefront of innovation, Zetes has also established a collaboration with the Autonomous University of Barcelona (UAB). The Software Factory's operating centre is located in the university research park, permitting active collaboration with the UAB research departments. On top of this, Zetes: • sponsors research programs • offers students the opportunity to collaborate with the Software Factory • allows students, as part of their academic training, to use professional software such as MCL™.

The next step in these collaborative innovation programmes is participation in the European Framework Programme for Research and Innovation "Horizon 2020".

Co-operation with academia is also growing in Belgium, in particular with the initiative of Logistics in Wallonia, the Walloon competitiveness cluster for Transport and Logistics. In this context Zetes collaborates on research and innovation programs with institutions like the Free University of Brussels, the Catholic University of Louvain and the University of Liege.

eaZySign, an online authentification platform

using the signatory's electronic ID card and pincode. This platform is part of the "Ton eID, ça simplifie" initiative by the Belgian authorities to encourage citizens to use their electronic identity cards (eID) and to stimulate companies to develop eID applications and to exploit the full potential of this electronic card. This is particularly suited to, among others, the insurance and banking sectors.

The collaboration between the sea anemone and the clownfish is all about safety. In exchange for cleaning, the plant shelters the fish, shielding it against other species. Security is also of paramount importance to Zetes. Businesses and governments entrust us with critical data that we manage and store while providing a high degree of protection.

THE KNOWLEDGE AND KNOW-HOW OF OUR PERSONNEL: A CRUCIAL ASSET Zetes understands the importance of its human capital and takes good care of the well-being of employees. This produces a sense of belonging and strong commitment from staff. Equally attentive to conserving the environment, Zetes seeks to undertake its integrations optimally, with respect for everyone.

Employment Zetes' main driving force: its employees Zetes owes its success first and foremost to its employees. As a service company, its main strength lies in creating strong relationships with customers and creatively finding solutions to their problems. To achieve this, an in-depth understanding of the markets in which these customers operate is essential, as are the mastery of various automatic identification technologies and an excellent understanding of local cultures.

Capitalising on know-how All this makes the knowledge and knowhow of the company’s personnel a crucial asset, which Zetes makes every effort to retain and strengthen.

Sharing knowledge between colleagues serves to enhance individual skills and strengthens the Group as a whole.

Evolution through exchange Faced with a rapidly changing world, it is vital that employee skills are regularly updated. Zetes has therefore introduced structures for sharing knowledge and capitalizing on existing experience.

For several years, internal training and the recruitment of highly qualified personnel have enabled Zetes to significantly strengthen skill levels and customer service effectiveness. In 2014, training courses were held at both Group level and within each subsidiary. The intensification of these exchanges seeks to increase the distribution of knowledge among different teams, keep specialists abreast of the latest developments, and increase the standardization of solutions.

SOCIAL RESPONSIBILITY / 42

/"The intensification of

the exchanges seeks to increase the distribution of knowledge among different teams, keep specialists abreast of the latest developments, and increase the standardization of solutions."

Respect for the individual Zetes is vigilant to ensure that its personnel are not subjected to discrimination of any kind, whether racial, physical, political, religious, or sexual. The company respects all employment legislation within the European Union and in countries outside the EU where it has activities. Zetes offers its personnel proper social benefits, often over and above statutory requirements.

The company seeks to contribute to the development of less favoured regions, such as Africa, by recruiting and training local workers and entrusting them with technical and managerial responsibilities.

Empowering disadvantaged youth in South Africa In March 2013, Zetes' South African subsidiary, in partnership with MICT SETA, an organization specializing in training for the information and communication technologies sector, committed itself to an education programme. The goal was to empower five young people from previously disadvantaged communities in South Africa and give them the skills they need in order to move ahead on the job market.

This one-year programme focused on developing the skills of each individual, both in the educational environment and in that of the company. After taking courses and passing the examinations in the training centre, the students joined the Zetes support team for a six-month work experience period. There they were able to work on both the service desk and in the repair centre.

ANNUAL REPORT 2014 / EFFICIENT COLLABORATION SUSTAINABLE GROWTH

SOCIAL RESPONSIBILITY / 43

Thanks to the regular transfer of skills and projects, each student obtained a MICT SETA technical support diploma, allowing them to continue to develop their careers in the information technology sector.

This competence was originally developed for sensitive projects like those of People ID, but also represents a growing asset in Goods ID, where companies consider that a data breach can considerably weaken their business.

In South Africa, Zetes is currently in the process of setting up a second learning programme with five additional young people.

/"The processing of citizen-

related data calls for a very advanced level of protection and, hence, for secure data management systems. "

Better identification and traceability = better protection Sensitive data protection.

Protection of citizens People identification is vital to ensuring democratic rights, such as electoral participation and the protection of personal data. People identification provides answers to needs relating to: • Preparing a democratic electoral process • Combating identity theft • Combating fraud.

The processing of citizen-related data calls for a very advanced level of protection and, hence, for secure data management systems. With this in mind, Zetes became one of the first businesses in its sector to be awarded ISO 27001 certification for producing eID and eTravel documents (i.e. passports, visas). This is the only internationally recognized standard that defines security prerequisites for the implementation of an Information Security Management System (ISMS).

Consumer protection In recent years, consumers and, more specifically, consumer health, have become central concerns of the supply chain. Food and pharmaceutical industries and similar sectors need to comply with increasingly stringent national and supranational regulations. The portfolio of solutions that Zetes has developed meets these societal issues by introducing new elements such as use of the cloud.

Traceability of defective products or the identification of counterfeit goods is greatly improved.

Environmental protection

Trainees working under the partnership with the MICT SETA South Africa

The streamlining of processes inevitably involves the dematerialisation of information and the automation of information flows. For this, Zetes makes particular use of mobile communications.

Whether by optimizing supply chains or the use of electronic signatures, this remote exchange of information contributes to reducing physical movement. Also, at company level, process automation results in diminished errors, with a knockon reduction in losses during production or further down the supply chain.

Out of a concern to respect the environment and despite a relatively small ecological footprint, Zetes has introduced an environmental management system and obtained ISO 14001 certification for its ID and travel cards and documents site. This makes it possible to monitor the impact of its industrial activity on the environment.

SOCIAL RESPONSIBILITY / 44

As part of this initiative, a volunteer GreenTeam has been set up to develop initiatives and to ensure the achievement of the following objectives:

Engagement with voluntary associations

• Awareness and continuous improvement of environmental efforts; • Sustainable management of raw materials; • Responsible use of energy; • Ecological management of the building and surrounding areas.

Committing with the "Nos Enfants Cardiaques" voluntary association

All processes have been reviewed for their environmental impact and solutions for improvement have already been implemented.

Monitoring Ebola patients - MSF treatment centre in Monrovia © Sylvain Cherkaoui

For the eighth consecutive year, Zetes has partnered with "Nos Enfant Cardiaques" for the annual Brussels 20 km halfmarathon. This organization is composed of parents of children with heart defects and members of the healthcare team at the Cliniques Universitaires Saint-Luc in Brussels. It aims to improve the wellbeing of children with heart defects and their families.

This collaboration is an opportunity for the Group's employees to participate in a sports event, as part of a team of 250 runners, in support of a charity.

Traceability solutions to help MSF combat the spread of Ebola Zetes has participated in the first phase of a Médecins sans Frontières (MSF) project to organize the monitoring of patients with Ebola. Its role consisted of providing a mobile application for tracking the location, status and treatment of patients using portable terminals. The pilot phase of the system took place in MSF’s largest treatment centre in Monrovia (Liberia).

Spiders and trees live in close symbiosis. The tree gives the spider a space in which to build an ever-wider net, offering it a solid framework in which to develop. Zetes applies this strategy to building its network of subsidiaries and divisions, resulting in structural and sustainable growth of the entire group.

TRANSPARENCY IS KEY TO MAINTAIN A RELATIONSHIP OF TRUST WITH OUR SHAREHOLDERS Clear communication on the Group's achievements and goals ought to enable investors to gain an accurate picture of its financial health and its prospects. Therefore, Zetes works continuously to improve its communication tools.

The company pays particular care to the preparation of its annual and interim results. Management takes care to remain accessible, especially to answer questions that might arise in investors' minds. The website is updated at regular intervals, with emphasis on ease of navigation to enable investors to locate as quickly and easily as possible, the information they need.

The Group also seeks to reward investors for the confidence they place in it, and distributes to them a significant part of the earnings achieved, in the form of dividends or treasury share purchases.

Contacts ZETES INDUSTRIES SA Da Vinci Science Park Rue de Strasbourg 3 B-1130 Bruxelles RPM: 0425.609.373.

Tel. +32 (0)2 728 37 11 Fax +32 (0)2 728 37 51

INVESTOR RELATIONS / 46

Investor relations and communications Investor Relations: Benoît Heins Media Relations: Sandra Franchitti Tel. +32 (0)2 728 37 11 Fax +32 (0)2 728 37 51 E-mail: investor@zetes.com Euronext Brussels : ZTS Financial information The company’s annual report will be sent to registered shareholders and to others upon request.

This report, as well as any other public information, can be obtained from the Company’s headquarters and via the website www.zetes.com.

Individuals who would like to be on our distribution list for press releases may inform us of their interest by sending an email to investor@zetes.com or by registering on our website.

Financial services are provided in Belgium by KBC Bank.

KBC Bank : Avenue du Port 2 – 1080 Brussels Calendar Annual General Meeting: last Wednesday of May - May 27 2015 at 10:00 am Publication of half year results: first week of September – September 4, 2015 Dividend payment: June 3 2015 Publication of full year results: third week of March Dividend A dividend of € 0.63 per share (coupon n°11) will be proposed at the AGM of May 27 2015. The "ex-date" (on which a shareholder is no longer entitled to coupon n°11, which is retained by the vendor) is June 1 2015. The payment date is June 3 2015. The dividend is payable at KBC Bank, the company's principal paying agent.

Benoît Heins Investor Relations

CONSOLIDATED DATA PER SHARE (IN €)

2009

2010

2011

2012

2013

2014

Capital and reserves

13.17

14.64

14.70

14.77

14.95

15.41

Cash flow

2.03

2.76

2.72

2.01

2.00

2.78

Current EBITDA

2.55

3.59

3.50

2.69

2.62

3.72

Current net profit (Group share)

1.06

1.63

1.31

0.86

0.78

1.34

Net profit (Group share)

0.96

1.57

1.18

0.70

0.66

1.21

Net profit (excluding discontinued operations)

0.96

1.57

1.18

0.70

0.66

1.21

Number of shares at December 31

5 389 714

5 389 714

5 389 714

5 389 714

5 389 714

5 389 714

Average number of shares

5 342 394

5 324 566

5 331 111

5 247 116

5 156 750

5 162 665

Average number of shares for calculating diluted earnings

5 342 394

5 324 566

5 331 111

5 247 116

5 156 750

5 162 665

Diluted current net profit (Group share)

1.06

1.63

1.31

0.86

0.78

1.34

Diluted net profit (Group share)

0.96

1.57

1.18

0.70

0.66

1.21

Diluted net profit (excluding discontinued operations)

0.96

1.57

1.18

0.70

0.66

1.21

Gross dividend / Capital repayment

0.36

1.00

0.55

0.55

0.55

0.63

Net dividend / Capital repayment

0.27

0.75

0.41

0.46

0.41

0.47

Highest price

17.7

17.7

18.8

16.4

18.0

25.2

Lowest price

12.0

14.5

15.3

12.6

14.3

17.4

Price at December 31

16.4

17.4

15.9

15.0

17.5

24.99

Price / earnings at December 31

17.0

11.1

13.4

21.4

26.6

20.7

Gross dividend yield

2.2%

5.7%

3.5%

3.7%

3.2%

2.5%

Net dividend yield

1.7%

4.3%

2.6%

3.0%

2.4%

1.9%

471

626

1 100

772

736

953

7 280

10 292

18 935

11 613

12 014

20 361

88 122

93 781

85 481

80 954

94 051

134 662

Annual volume ('000 of shares) Annual volume ('000 of EURO) Market capitalization at December 31 ('000 EUR)

ISIN Codes Zetes Industries shares : BE0003827442

investors.zetes.com

Publication Zetes Corporate Marketing & Communication

Executive Editor Pierre Lambert, CFO Da Vinci Science Park Rue de Strasbourg 3 B-1130 Brussels

Design Choco cvba www chocoweb be

Layout and production www visible be This report was written in French The Dutch and English versions are provided for the convenience of the reader: only the French version is legally binding

ZETES FINANCIAL INFORMATION AND CORPORATE GOVERNANCE EFFICIENT COLLABORATION SUSTAINABLE GROWTH

IN NATURE THE SUCCESS STORIES ARE ALL ABOUT COLLABORATION IN EFFICIENCY

/2

CONTENTS

03

CONSOLIDATED INCOME STATEMENT

04

CONSOLIDATED FINANCIAL POSITION

05

CONSOLIDATED CASH FLOW STATEMENT

06

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

07

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

12

NOTES TO THE CONSOLIDATED ACCOUNTS

17

SEGMENT INFORMATION

34

MANAGEMENT OF RISKS AND UNCERTAINTIES

36

AUDITOR’S REPORT

37

STATUTORY ACCOUNTS

41

CORPORATE GOVERNANCE

/3

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

The consolidated financial statements for the year ended December 31, 2014 as presented in this annual report were prepared under the responsibility of the Board of Directors and authorized for issue on April 1, 2015 subject to approval of the statutory non-consolidated accounts by the shareholders at the Ordinary General Meeting to be held on May 27, 2015.

Consolidated income statement NOTES

2012

2013

2014

214,126 (120,427) 93,699

211,472 (120,026) 91,446

245,270 (141,690) 103,579

(55,252) (24,331) 14,117 (1,207) 12,910 (7,472) 5,438

(54,250) (23,661) 13,535 (820) 12,715 (7,604) 5,111

(57,516) (26,859) 19,205 (1,015) 18,190 (8,407) 9,783

61 (543) 4,956 (1,431) 3,526

(3) (776) 4,333 (935) 3,397

30 (566) 9,247 (3,051) 6,196

Non-controlling interests Net profit of the Group

(152) 3,677

12 3,385

(41) 6,237

Current EBIT (1) Net current result (1) (3)

6,645 4,512

5,931 4,028

10,798 6,917

3,677 106 (13) 94 3,771

3,385 (480) (22) (502) 2,883

6,237 142 95 237 6,474

5,247 116 0.70 0.86 5,247 116 0.70

5,156 750 0.66 0.78 5,156 750 0.66

5,162 665 1.21 1.34 5,162 665 1.21

In ‘000 € Sales Cogs Gross Margin Employee expenses Other operating expenses Current EBITDA (1) Non current costs EBITDA Provisions, depreciation, amortisation, impairment losses EBIT Result from the disposal of fixed assets Financial result Result before taxes Income tax PROFIT OF THE PERIOD

2

4 6 / 7 / 9 / 10

4 5

Total comprehensive income In ‘000 € Net profit of the Group Currency translation differences (recyclable component) Net revaluation of hedging instruments (recyclable component) Other comprehensive income, net of related tax effects(*) Total comprehensive income of the Group(**) (*) “Other comprehensive income” (**) “Total comprehensive income”

Earnings per share (€ per share) Number of shares outstanding (2) Net result (3) Net current result (1) (3) Number of shares fully diluted (2) Net diluted result (3) (1) "Current" excludes restructuring expenses and non current income/costs/badwill (2) Weighted average number of outstanding shares (3) Attributable to equity holders of the parent company

12

12

/4

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

Consolidated financial position (before appropriation) NOTES

2012

2013

2014

Tangible assets

6

13,625

15,873

16,386

Intangible assets

7

5,433

6,659

6,489

Goodwill Deferred tax assets Financial assets and other non current assets Non current assets Inventories Current trade and other receivables Current tax assets Current prepayments Cash and cash equivalents Current assets Total assets

7 5 8

39,878 3,204 556 62,697 15,631 57,724 216 9,900 12,797 96,268 158,964

39,924 4,385 2,705 69,545 14,302 57,986 181 10,588 10,585 93,642 163,187

40,033 4,885 2,066 69,859 17,146 67,623 440 13,116 16,290 114,614 184,474

76,109 963 77,072 2,921 800 192

78,731 808 79,539 792 921 179

In ‘000 â‚Ź

ASSETS

9 10

13

EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Non-controlling interests Total equity Non current borrowings Non current provisions Non current obligations

12 13 14 14

76,461 1,039 77,501 1,012 771 241

Deferred tax liabilities

5

1,854

2,550

2,698

3,878 4,921 114 33 68,185 2,617 1,715 77,586 158,964

6,464 10,983 24 65,905 1,288 1,450 79,651 163,187

4,590 14,208 26 81,346 3,727 1,040 100,345 184,474

Non current liabilities Current interests bearing borrowings Current provisions Current obligations Current trade and other payables Current tax liabilities Other current liabilities Current liabilities Total equity and liabilities

13 14 14 15

/5

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

Consolidated cash flow statement

In ‘000 € CASH AND CASH EQUIVALENTS, BEGINNING BALANCE (I) Cash flows from the P&L Result before tax Depreciation on fixed assets Depreciation on development costs Write-downs on inventories & receivables Write-downs on financial assets Provisions Net Financial charges Income tax paid Other increases (decreases) incl. badwill Working capital Decrease (increase) in assets (1) Increase (decrease) in liabilities CASH FLOWS FROM THE OPERATIONS (II) Acquisitions Fixed assets Subsidiaries (net of cash acquired) Development expenses Disposals Fixed assets Interests received (+) CASH FLOWS RELATING TO INVESTING ACTIVITIES (III) Increase (decrease) of cash flows from financing Capital Proceeds from finance lease/bank loans Repayments of finance lease liabilities/bank loans Bank overdrafts increase (decrease) Cash restricted or pledged Financial charges Dividends Paid Own shares NET CASH FLOWS RELATING TO FIN. ACTIVITIES (IV) NET INCREASE IN CASH AND CASH EQUIVALENTS (V) = (II) + (III) + (IV) Exchange rates impact (VI) CASH AND CASH EQUIVALENTS, CLOSING BALANCE (VII) = (I) + (V) + (VI) (1) Included the change in LT trade receivables

2012

2013

2014

14,306 10,541 4,956 5,033 1,686 538 26 (19) 153 (1,694) (138) 1,840 3,235 (1,395) 12,381 (7,934) (5,361) (740) (1,834) 201 201 71 (7,662) (1,395) 105 (2,080) 588 (8) (224) (2,895) (1,685) (6,199) (1,481) (28) 12,797

12,797 10,337 4,333 4,927 1,748 824 44 (200) 232 (1,504) (68) (6,311) (2,796) (3,514) 4,026 (11,086) (7,986) (343) (2,756) 366 366 24 (10,696) 8,053 2 3,947 (2,108) 6,185 28 (256) (2,875) (250) 4,672 (1,998) (214) 10,585

10,585 14,369 9,247 5,501 2,324 416 1 106 177 (3,429) 27 2,701 (14,126) 16,827 17,070 (8,754) (5,851) (322) (2,582) 158 158 100 (8,497) 1,055 3,160 (2,186) 116 (35) (277) (2,857) (931) (3,009) 5,564 141 16,290

/6

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

Consolidated statement of changes in equity Issued capital

Currency translation reserves (2)

Hedging reserves

Total (1)

(286)

(0)

77,270

1,115

78,385

(13) (13)

3,677 94 3,771 0 (2,895) (1,685) 0

(152)

106 106

(29)

3,526 94 3,619 105 (2,895) (1,685) (29)

76,461

1,039

77,501

3,385 (502) 2,883 (2,875) (250)

12 12

3,397 (502) 2,895 (2,875) (250)

(110)

(110)

(82)

(192)

(0)

(7)

(7)

76,109

963

77,072

6,237 237 6,474 34 (2,857) (931)

(41)

6,196 237 6,433 34 (2,857) (931)

Reserves Own shares

Non controlling interests Total equity

In ‘000 € Balance at 31 December 2011

54,311

Net result of the period Result directly allocated to equity Total comprehensive income Capital increase Dividends Acquisitions / sales of own shares Other variations Balance at 31 December 2012

24,812 3,677 3,677 (2,895)

(1,685) 54 54,311

25,649

Net result of the period Result directly allocated to equity Total comprehensive income Dividends Acquisitions / sales of own shares Increase (decrease) through changes in ownership interests in subsidiaries that do not result in change of control Other variations

(4,416)

4,416

Balance at 31 December 2013

49,895

30,465

(54) (3,253)

(234)

(13)

(480) (480)

(22) (22)

3,385 3,385 (2,875) (250)

Net result of the period Result directly allocated to equity Total comprehensive income Share-based payment Dividends Acquisitions / sales of own shares Increase (decrease) through changes in ownership interests in subsidiaries that do not result in change of control Other variations Balance at 31 December 2014

(1,568)

(3,502)

(714)

(35)

142 142

95 95

6,237 6,237 34 (2,857) (931)

49,895

(152) 105

(41)

(99)

(99)

(103)

(202)

(0)

(0)

(11)

(11)

78,731

808

79,539

33,780

(4,433)

(572)

60

(1) Attributable to equity holders of the parent company (2) The increase of the translation reserves for an amount of 142 thousand € is mainly explained by pound sterling and the swiss franc's increase against the euro.

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

/7

Summary of principal accounting policies The principal accounting policies adopted when preparing these consolidated financial statements are set out below.

1. Declaration of conformity The consolidated financial statements at 31 December 2014 have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted in the European Union. The Zetes Group has not anticipated any standards or interpretations issued prior to the approval date of the financial statements, and which come into application later than 31 December 2014.

2. Summary of changes in accounting principles The new standards and interpretations listed below are mandatory for the first time for the annual financial periods beginning on or after the date mentioned next to the standard or interpretation.

a. Standards and interpretations applicable from 2014 IFRS 10 Consolidated Financial Statements (1/1/2014).

IFRS 11 Joint Arrangements, replacing IAS 31 (1/1/2014).

IFRS 12 Disclosures of interests in other entities (1/1/2014).

These standards affect the information to be supplied in the consolidated financial statements.

Amendments to IAS 27 Separate Financial Statements (1/1/2014).

Amendments to IAS 28 Investments in associates and joint ventures (1/1/2014).

Amendments to IFRS 10, IFRS 12 Consolidated Financial Statements and Disclosure of Interests in Other Entities: Investment Entities and IAS 27 (1/1/2014) Amendments to IFRS 10, 11 and 12 Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition guidance (1/1/2014) Amendments to IAS 32 Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities (1/1/2014).

Amendments to IAS 36 Recoverable amount Disclosures for Non-Financial Assets (1/1/2014) Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting (1/1/2014) These standards, interpretations and amendments to standards have no significant impact on the consolidated financial statements.

b. Standards and interpretations published by not yet in force at 31 December 2014 IFRIC 21 IFRS Amendments to IAS 19 IFRS IFRS IFRS 9 IFRS 14 IFRS 15 Amendments to IFRS 10 and IAS 28

Levies charged by Public Authorities (1/1/2015) IFRS annual improvements cycle 2011-2013 (1/1/2015).

Employee Benefits: Employee Contributions (1/2/2015) IFRS annual improvements cycle 2010-2012 (1/2/2015).

IFRS annual improvements cycle 2012-2014 (1/1/2016, but not yet endorsed at European level).

Financial Instruments (1/1/2018, but not yet endorsed at European level) Regulatory deferral accounts (1/1/206, but not yet adopted at European level) Revenue from contracts with customers (1/1/2017, but not yet adopted at European level Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (1/1/2016, but not yet endorsed at European level) Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations (1/1/2016, but not yet endorsed at European level) Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation (1/1/2016, but not yet endorsed at European level) Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants (1/1/2016, but not yet endorsed at European level) Amendments to IAS 27 Equity Method in Separate Financial Statements (1/1/2016, but not yet endorsed at European level) Amendments to IFRS 10, IFRS 12 Investment Entities: Applying the Consolidation Exception (1/1/2016, but not yet endorsed at and IAS 28 European level) Amendments to IAS 1 Disclosure Initiative (1/1/2016, but not yet endorsed at European level) The impact of the application of these standards, interpretation and amendments is currently being assessed.

/8

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

3. Preparation The financial statements are prepared on a historical cost basis, except for the measurement at fair value of availablefor-sale investments and derivative financial instruments. The consolidated financial statements are presented in euro, which is the company’s functional currency.

The preparation of these financial statements requires the use of estimates and assumptions in determining the value of assets and liabilities at the balance sheet date and income and expenses for the year. The Zetes Group revises its estimates at each closing date based on the best available information. The key estimates involve assessing: •

assets and liabilities in business combinations

•

the recoverable amount of goodwill and the intangible assets (development costs)

•

the results of construction contracts

•

provisions, including for litigation

•

capitalized tax loss carry-forwards

•

where appropriate, the forecast evolution in results

4. Basis of consolidation a. Subsidiaries Subsidiaries are those entities controlled by the Company.

Control exists when the Company has an interest of more than one half of the voting rights of an enterprise or otherwise has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences (or a date nearby) until the date that control ceases.

The acquisition of subsidiaries (business combination) is recorded in accordance with IFRS 3 revised, with identifiable assets acquired and liabilities assumed recorded at the time of takeover of control at fair value. Business combinations made before 1 January 2010 were accounted for under IFRS 3 (as applicable prior to revision) and have not been restated.

Intra-group balances and transactions, and unrealised gains arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

b. Joint arrangements Joint arrangements are defined as any operations over which parties exert joint control (IFRS 11). In 2009, Zetes concluded such an agreement with Pitkit Printing Entreprises. Based on an analysis of the contract, and consistent with the accounting of Pitkit Printing Entreprises, this partnership is treated in the consolidated financial statements as a joint operation.

5. Foreign currency translation Transactions in foreign currencies are translated at an average rate that approximates the foreign exchange rate ruling at the time the transaction took place. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to euro at the foreign exchange rate prevailing at that date. All foreign exchange gains and losses arising on this translation and from the settlement of the transactions are

recognised in the income statement. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated to euro at the foreign exchange rate prevailing at the date of the transaction.

Upon consolidation, the assets and liabilities of subsidiaries stated in foreign currencies are translated to euro at foreign exchange rates prevailing at the reporting date. Goodwill and fair value adjustments related to the acquisition of foreign subsidiaries are translated at the historical rate at the date of acquisition and therefore no exchange differences arise. Income and expenses are translated to euro at the average rate for the period. Foreign exchange differences arising on translation are recognised directly in equity. When a foreign entity is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

The main exchange rates used are: Closing 2014

Closing 2013

Average 2014

Average 2013

Pound sterling

0.7789

0.8337

0.8061

0.8491

Swiss franc

1.2024

1.2276

1.2146

1.2309

US dollar

1.2141

1.3791

1.3288

1.3282

14.0353

14.566

14.3988

12.7768

1 Euro =

Rand

6. Revenue recognition The Company does not specifically break out the sales of goods from the provision of services. In various cases, solutions are sold at an overall sales price with no distinction made between income from the provision of services and that from the sale of goods.

The level of gross margin is the assessment criterion used by the Company as reflecting the value added by the Group.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to Zetes and the revenue can be measured reliably. Additionally, the following criteria must be met:

a. Sale of products Revenue from the sale of hardware products is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer.

Income from the sale of standard software is recognised at the time of physical delivery to the customer, to the extent that such sale is definitive. As a general rule, ownership of the software remains with the publisher, which grants only user rights to its customer.

b. Maintenance contracts Revenue from maintenance contracts is recognised on a straightline basis over the term of the service contract.

c. Integration services Revenue from integration services, such as project management and installation of equipment, is recognised in the income statement according to the percentage of completion method. The degree of completion is measured by reference to the proportion of service costs incurred to date as a percentage of the estimated total service costs for each project.

/9

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

d. Projects Each project is broken down into its elementary components: hardware, software and services. Income is then recognised according to the rules which apply to each component. Where the individual components of a project cannot be broken out (sale of a total project), a global state of progress is determined and income from the project is determined as a function of this.

e. Construction contracts A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and functions or their ultimate purpose or use. In the Zetes People Authentication business, a construction contract typically involves the design and development of a card production pilot as well as the card production roll-out accompanied by project management and other value-added personalisation services.

When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised using the percentage of completion method. The stage of completion is measured by reference to the number of cards produced in proportion of the total to be produced for each project. Contract cost includes all expenditure directly related to specific projects and an allocation of fixed and variable overheads incurred in connection with contract activities.

The aggregate of the contract costs incurred that relate to contract activity already performed, plus/minus the profit/loss recognised on each contract, is compared against the progress billings to date. Where costs plus/minus profit/loss exceed progress billings, the net balance is shown under trade and other receivables. Where progress billings exceed costs plus/ less profit/loss, the net balance is shown under trade and other payables. Advance billings that relate to work to be performed in the future, are not considered in the above calculation and are included in advances received.

When it is appears probable that total contract costs will exceed total contract revenue, the expected loss is recognised in the income statement immediately. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that those costs will be recovered.

f. Royalties, interest and dividends Revenue from royalties is recognised on an accrual basis in accordance with the substance of the relevant agreements.

Interest income is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to Zetes. Income from dividends receivable is recognised when the right to receive payment is established.

7. Government grants A government grant is recognised when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.

Grants related to assets (such as for capital expenditure) are credited to deferred income and released to the income statement on a straight-line basis over the expected useful life of the relevant asset.

Grants relating to income are recognised in the income statement over the period necessary to match them with the costs they are intended to compensate.

8. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

Land is not depreciated while owned buildings are depreciated over 20 years on a straight-line basis. Buildings are revalued by an outside valuer every three years, with recognition of any significant changes. Leasehold improvements are depreciated over the shorter of estimated useful life and lease term. Other items are depreciated on a straight-line basis over the estimated useful lives as follows: Buildings structural works Building equipment and installations Plant installations, machinery and equipment

Goods ID equipment for commercial use (demo stock) Computer and office equipment Furniture Vehicles

20 years Maximum 10 years 3 - 5 years , or by the actual number of items produced vs. the total number of items expected to be produced on the machine 2 – 4 years 3 – 5 years 5 – 10 years 4 – 5 years

9. Intangible assets a. Research & development Zetes does not perform any fundamental research activities.

Development expenditure is recognised as an intangible asset, only when (among other criteria) it can be demonstrated that the product resulting from the development is likely to generate economic benefits and when the expenditure incurred on the development can be measured reliably. Capitalised development expenditure is measured at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is charged on a straight-line basis over the estimated useful life of the related asset, which is expected to be 3 years.

b. Other intangible assets Expenditure to acquire computer software and other licenses are stated at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is charged on a straight-line basis over the estimated useful life, not exceeding 5 years.

/ 10

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

c. Goodwill

Depreciation

Goodwill arising on acquisition of subsidiaries and joint ventures represents the excess of the cost of the acquisition over Zetes’ share in the net fair value of the identifiable assets liabilities and contingent liabilities recognised. Goodwill is recognised as an asset and is initially measured at cost. Subsequently its carrying value may be reduced by accumulated impairment losses (application of an impairment test).

Assets held under financial leases are depreciated on a straightline basis over the useful life of the asset. If there is no reasonable certainty that Zetes will be the owner of an asset at the end of a lease, the asset is 100% depreciated over the shorter of the length of the lease or the useful life of the asset.

10. Current assets and liabilities a. Inventories Inventories are stated at the lower of cost and net realisable value. In respect of raw materials and consumables, cost is accounted for according to the weighted average price. The cost of goods purchased for re-sale is the individual purchase price of each individual item or the weighted average price. Work in progress and finished goods are valued at manufacturing cost, which includes all direct production costs.

b. Inventory write-down The amount of write-down is estimated by an analysis of stock rotation (sales/product), with a distinction made between finished goods and repair parts/equipment.

b. Operating leases Leases that do not meet the criteria of finance leases are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the lease term.

13. Income taxes Income tax expense is recognised in the income statement.

a. Current tax Current tax is the estimated tax payable on the taxable income for the year, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

b. Deferred tax

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised.

Deferred tax is provided using the balance sheet method in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

The amount of any reversal of inventory write-downs owing to an increase in the net realisable value is accounted for as a reduction in the amount of inventory charged to the period in which the reversal takes place.

Deferred tax liabilities are recognised for all taxable temporary differences, except where the deferred tax liability arises from goodwill amortisation.

c. Trade receivables Trade receivables are recognised and carried at original invoice amount (nominal value). Allowances are recognised when collection of the full amount is no longer probable.

d. Trade payables Trade payables are stated at their nominal value.

11. Cash and cash equivalents Cash and cash equivalents are carried at nominal value in the balance sheet. They comprise cash at bank and in hand, as well as short-term deposits with banks and commercial paper with a term of three months or less, that are readily convertible to cash and that are not subject to significant risks of changes in value.

12. Leases a. Financial leases Leases, in which Zetes obtains the right to use assets, are classified as finance leases if substantially all the risks and rewards incident to ownership of the leased item are transferred to Zetes. Finance leases are capitalised at the fair value of the leased item at the inception of the lease or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and the reduction of the lease debt as to achieve a constant rate of interest on the remaining balance of the debt. Finance charges are charged directly against the income statement.

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised (selected horizon: 5 years).

In respect of tax losses acquired upon investments in subsidiaries and joint operations, deferred tax assets are recognised only to the extent that it is probable that the taxable profit against which the tax loss can be utilised will be generated within five years after the acquisition.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

14. Equity – capital increase The transaction costs linked to any capital increases are accounted for as a deduction from equity, net of any related income tax benefit.

/ 11

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

15. Dividends payable Dividends declared after the balance sheet date are not recognised as a liability at the reporting date but are directly deducted from equity when paid.

16. Provisions A provision is recognised when (i) Zetes has a present obligation (legal or constructive) as a result of a past event, (ii) it is probable that an outflow of resources will be required to settle the obligation, and (iii) a reliable estimate of the amount can be made. Where Zetes expects an amount for which a provision has been charged to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Commitments resulting from restructurings are recognised when announced to the persons concerned.

17. Pension benefit plans and other post-employment benefits Zetes operates various post employment benefit plans in accordance with the local conditions and practices of the countries in which it operates.

Costs relating to defined contribution pension plans are recognised when due. There are currently no pension plans of the defined benefit type in place at Zetes. In Belgium, however, legislation requires that the employer to guarantee a return on employer and employee contributions, thereby creating a potential liability for the Group. Given this guaranteed return, Belgian defined contribution schemes could be viewed as defined benefit schemes.

Certain subsidiaries provide a post-employment benefit that is not a pension plan. The benefits represent a legal obligation consisting of defined payments when employees leave the Company. The related provision is determined separately for each employee (present value of the estimated future cash outflows).

18. Derivative financial instruments Derivative financial instruments utilised by Zetes are principally forward exchange contracts and currency options for hedging purposes. Any changes in fair value are taken directly to equity.

No derivative instrument is held or has been issued for trading purposes.

19. Borrowing costs Borrowing costs, including interest on borrowings and bank overdrafts, as well as ancillary costs incurred in connection with the arrangement of borrowings, are recognised as an expense in the period in which they are incurred.

/ 12

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

Notes to the consolidated accounts NOTE 1. CONSOLIDATED COMPANIES SUBSIDIARY Accuscan International Ltd Blackbird Data Systems Ltd Burotica SA Id-All BV IND Systeme GmbH Logiscan SARL Metaform Ltd Powersys 2000 S.L. RASW Management Maarn BV RFIDEA SA Zetes Austria GmbH Zetes Auto ID Systems AG Zetes BV Zetes Côte d'Ivoire Zetes Fastrace SA Zetes Gambia Ltd Zetes GmbH Zetes Holding GmbH Zetes Holding Ltd Zetes Industries (Israël) Ltd Zetes International GmbH Zetes Ireland Ltd Zetes Ltd Zetes Multicom SA Zetes NetWave SA Information Systems and Telecommunications Zetes Pty Ltd Zetes SA Zetes SAS Zetes Senegal SARL ZETES Solutions CZ s.r.o.

Zetes SRL Zetes Technologies SA Zts Lda

Country

Ownership %

Consolidation Method

UK Ireland Portugal The Netherlands Germany France Israel Spain The Netherlands Belgium Austria Switzerland The Netherlands Ivory Coast Belgium Gambia Germany Germany UK Israel Germany Ireland UK Spain

100 100 100 100 100 100 100 100 100 100 100 100 100 100 75.9 100 100 100 100 100 100 100 100 100

Global Global Global Global Global Global Global Global Global Global Global Global Global Global Global Global Global Global Global Global Global Global Global Global

Greece

58.1

Global

South Africa Belgium France Senegal Czech Republic Italy Belgium Portugal

90 100 100 100 100 100 50 100

Global Global Global Global Global Global Global Global

Change (1)

Date of change

100

September 2014

100

January 2014

15

April 2014

Number of consolidated subsidiaries: 33

Zetes Industries directly or indirectly owns 100% of the capital of the majority of the Group's operating companies ; Zetes Industries financially supports its subsidiaries through investmenst (capital) or loans. On 31/12/2014, Zetes Industries had non-trade receivables due by Group companies for an amount of 25.5 million €.

Zetes Industries guarantees on a case-by-case basis the commitments of its subsidiaries towards various banks, customers and suppliers (cf. note 14 - contingent liabilities).

(1) % of shares acquired during the year

/ 13

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

01-Zetes Industries SA (Belgium) December 2014

50%

03-Zetes Technologies SA (*)

100%

34% 41.9%

02-Zetes SA Belgium

100%

07-Zetes Fastrace Belgique

100%

100%

100%

30-Zetes Israël

Israël

100%

04-Zetes France

100%

45-Rfidea Belgium

100%

15-Burotica Portugal

100%

34-Zetes GmbH Germany 37-IND Systeme

100% 29-Metaform Ltd

100%

50%

36-Zetes Holdings Germany (*)

37-IND Systeme GmbH Germany

10%

27-Zetes Italy

90%

90%

12-ID-All NL(*)

46-Zetes South Africa

43-Zetes Netwave Greece

100%

25-Zetes Multicom Spain 18.6%

100%

40-Zetes Logiscan France (*)

100%

17-Zetes BV Netherlands

28-Powersys Spain (*)

100%

23-Zetes Holdings Irland (*)

50-Zetes Austria

14-Zetes International Germany (*) 100%

81.4%

31-RASW Vocognition NL 100%

10%

41-Zetes Côte 10% d'Ivoire

90%

100%

47-Zetes Solutions CZ

10%

90%

48-Zetes Sénégal 100% SN

21-Zetes Blackbird Irland

49.84% 50.16%

49-Zetes Gambia GM

05-ZTS Portugal (*)

58.12%

35-Zetes Switzerland

100% 100%

50%

22-Zetes Holdings UK (*)

100%

38-Zetes Accuscan UK (*)

(*): limited or no operations

100%

32-Zetes UK

/ 14

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

2014 Events The subsidiary Zetes Gambia Ltd (Gambia), in formation at the end of 2013, has been included in the 2014 consolidated financial statements (start of the operations in December).

Early in 2014, Zetes acquired the remaining 15% of the shares of Zetes Industries (Israel) Ltd. In September 2014, Zetes established a new subsidiary in Austria (Zetes Austria GmbH).

The company Zetes Technologies BV (The Netherlands) merged with Zetes BV in The Netherlands.

Joint arrangements In 2009, Zetes created a partnership with the company Pitkit Printing Enterprises.

The analysis carried out according to IFRS 11 has highlighted the assets, liabilities, commitments, income and result attributable to each partner.

On this basis, and in a consistent way with the accounting treatment adopted by the Pitkit Printing Enterprises, this partnership is considered in the consolidated financial statements as a joint operation.

Group's interests in the joint arrangement on 31.12.2014 In '000 â‚Ź Non current assets Current assets Equity Non current liabilities Current liabilities

882 3,510 4,135 226 31

NOTE 2. EMPLOYMENT COSTS BOOKED In '000 â‚Ź Wages and salaries Defined contribution pension plan Total

2012

2013

2014

(53,803) (1,448) (55,252)

(52,789) (1,461) (54,250)

(56,055) (1,461) (57,516)

1,073 1,070

1,096 1,118

1,148 1,173

1,047 1,042

1,071 1,095

1,118 1,142

TOTAL IN UNITS Average Number of Staff Total staff at the end of the year

TOTAL IN FTE (1) Average Number of Staff Total staff at the end of the year (1) FTE: Full Time Equivalent

/ 15

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NOTE 3. SEGMENT REPORTING INCOME STATEMENT

2012

2013

2014

171,518 42,608 214,126

171,187 40,285 211,472

190,639 54,630 245,270

69,323 40.4% 24,377 57.2% 93,699 43.8%

68,334 39.9% 23,112 57.4% 91,446 43.2%

74,760 39.2% 28,819 52.8% 103,579 42.2%

(61,884) (14,490) (3,209) (79,583)

(59,226) (15,433) (3,252) (77,911)

(62,613) (18,265) (3,496) (84,374)

Current EBITDA Goods ID In % of sales People ID In % of sales Corporate Total current EBITDA Total current EBITDA in % of sales

7,439 4.3% 9,887 23.2% (3,209) 14,117 6.6%

9,108 5.3% 7,679 19.1% (3,252) 13,535 6.4%

12,147 6.4% 10,554 19.3% (3,496) 19,205 7.8%

EBITDA Goods ID People ID Corporate Total EBITDA

6,285 9,879 (3,254) 12,910

8,415 7,552 (3,251) 12,715

11,186 10,552 (3,547) 18,190

Current EBIT Goods ID In % of sales People ID In % of sales Corporate Total current EBIT Total current EBIT in % of sales

2,296 1.3% 7,641 17.9% (3,292) 6,645 3.1%

3,201 1.9% 6,159 15.3% (3,429) 5,931 2.8%

6,217 3.3% 8,266 15.1% (3,686) 10,798 4.4%

EBIT Goods ID People ID Corporate Total EBIT

1,142 7,634 (3,337) 5,438

2,508 6,033 (3,429) 5,111

5,255 8,264 (3,736) 9,783

In '000 â‚Ź Sales Goods ID People ID Corporate Total sales Gross margin Goods ID In % of sales People ID In % of sales Corporate Total gross margin Total gross margin in % of sales Operating expenses Goods ID People ID Corporate Total operating expenses

/ 16

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

FINANCIAL POSITION

2012

2013

2014

In '000 â‚Ź Goodwill Goods ID People ID Total goodwill

36,569 3,309 39,878

36,615 3,309 39,924

36,724 3,309 40,033

Fixed assets Goods ID People ID Corporate Total fixed assets

14,289 4,552 218 19,058

14,660 7,667 205 22,531

14,210 8,581 84 22,875

Inventories Goods ID People ID Total inventories

11,619 4,012 15,631

10,032 4,269 14,302

12,105 5,041 17,146

Current trade and other receivables Goods ID People ID Corporate Total current trade and other receivables

56,588 9,024 140 65,752

56,975 10,361 99 67,434

66,053 13,304 313 79,670

Total assets Goods ID People ID Corporate and other non allocated assets Total assets

119,065 20,896 19,003 158,964

118,282 25,605 19,299 163,187

129,093 30,235 25,146 184,474

60,432 7,989 729 69,150

58,294 6,171 769 65,234

72,134 9,452 1,403 82,989

60,432 7,989 90,543 158,964

58,294 6,171 98,722 163,187

72,134 9,452 102,887 184,474

5,929 1,185 80 7,195

5,827 4,821 95 10,743

5,091 3,341 8,432

Current trade and other payables Goods ID People ID Corporate Total current trade and other payables Total liabilities Goods ID People ID Corporate and other non allocated liabilities Total liabilities Capital expenditures Goods ID People ID Corporate Total Capital expenditures

/ 17

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

Segment information

performance in 2015. In absolute terms, the division recorded a historic high (current EBITDA) in H2,2014.

Zetes Industries applies IFRS 8 'Operating Segments'. The company is organized into two activity clusters - Goods ID and People ID - that operate in different ways and with distinct management and organizational structures.

The Goods ID division is highly decentralized, with a local presence responding to a need to be close to Zetes customers. The company has introduced an international structure, with physical locations across Europe, Israel and South Africa (16 countries).

In contrast, the People ID activity is highly centralized. However, with the conclusion of "build and operate" contracts, Zetes has proceeded to set up secure document production units in different countries. Zetes also has business development teams operating on the African continent.

Internal reporting is limited to the specific analysis of sales, gross margin, operating expenses, EBITDA and depreciation/ amortization for each cluster. Zetes has also a 'corporate' structure, the expenses of which are monitored separately.

Earnings results, investments, assets and liabilities for each segment include items directly attributable to a segment as well as items that can reasonably be allocated to it. Segment assets include fixed assets, goodwill, inventories, trade receivables, construction contracts, advance payments and taxes receivable.

Segment liabilities include trade payables, advance payments received, and debts to employees and government bodies.

Non-allocated sales/results relate to the central administration (corporate).

1. GOODS ID Goods ID

2011

2012

2013

2014

%

170,703

171,518

171,187

190,639

11.4%

In ‘000 € Sales Gross margin Operating expenses

2H 2014

2014

Sales

87,826

102,813

190,639

Gross margin

35,520

39,240

74,760

Gross Margin as % of Sales

40.4%

38.2%

39.2%

(31,371)

(31,242)

(62,613)

Current EBITDA

4,149

7,998

12,147

% Sales

4.7%

7.8%

6.4%

EBITDA

3,835

7,351

11,186

Operating expenses

Zetes' specialization on its 6 solutions and its unique service offering (life cycle management) for multinational corporations is enabling it to differentiate and counter the impact of margin erosion on mobile terminals, caused by the high concentration of equipment manufacturers and competition from lower-end mobile terminals, which are cheaper but more fragile. Once again, cost control linked to internal productivity gains allows Zetes to improve its performance.

In general, interest in the 6 key solutions continues and especially for the mobility platform on which the different market-specific applications can be run.

The current EBITDA/sales ratio rose by 1.05% from 5.32% in 2013 to 6.37% in 2014. Readers are reminded that this ratio was still at 4.34% in 2012.

Exchange rates have had little overall impact at divisional level, with the unfavourable development of the South African rand-euro exchange rate offset by favourable development of the GBP-euro rate. At constant exchange rates, revenue and gross profit both increased by a further 0.2%. The impact on current EBITDA is around € 0.1 million.

Goods ID

Currency effects excluded

68,518

69,323

68,334

74,760

9.4%

In ‘000 €

(61,884)

(59,226)

(62,613)

5.7%

Sales

9,882

7,439

9,108

12,147

Current EBITDA as % of Sales

5.80%

4.34%

5.32%

6.37%

9,258

6,285

8,415

11,186

Current EBIT

1H 2014

In ‘000 €

(58,636)

Current EBITDA

EBITDA

Goods ID

5,225

2,296

3,201

6,217

33.4%

Gross margin Gross Margin as % of Sales Operating expenses

2013

2014

%

171,187

190,996

11.6%

68,334

74,920

9.6%

39.9%

39.2%

(59,226)

(62,890)

6.2% 32.1%

32.9%

Current EBITDA

9,108

12,030

94.2%

% Sales

5.3%

6.3%

EBITDA

8,415

11,066

2013 closed on an uptrend, which continued throughout 2014.

Order taking was good, with customers showing great interest in the Group's solutions. In addition to the retail sector, which is historically very important to Zetes, postal services and logistics showed strong interest in mobility solutions. Growth is spread over most European countries and supported by a small number of large projects in Belgium, England, Switzerland and Germany, especially for the retail sector. It is these projects that explain the decline in Gross Margin/Sales ratio, as large hardware deliveries are traditionally at lower margins; in absolute terms, gross profit was up sharply. Certain major contracts were only partially implemented in 2014 and will continue to influence divisional

31.5%

As in 2013, there was no significant change to consolidation scope in 2014. The only acquisition relates, in the second half, to the acquisition of assets and the taking over of the team - a dozen people - of the company Rodata, in Austria. The division remains focused on implementing its 6 solutions strategy, which is generating internal growth.

/ 18

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

2. PEOPLE ID If 2013 was marked by the winning of long-term contracts in Belgium (e-passport), Senegal (biometric visa) and Gambia (e-passport), as well as the pre-execution preparation work, 2014 can be marked by the revenues these contracts generated.

Zetes also benefited from its successful business development activity, with the delivery of a large batch of biometric registration kits to the Electoral Commission in Uganda (first half 2014) and preparation of the register of electors in Togo (second half of 2014 and first half of 2015).

Gross margin as a percentage of sales is logically lower, because electoral projects, with their high hardware component, carry a lower gross margin than long-term contracts. In absolute terms however, gross margin is up very significantly at € 28.8 million (+ 24.7%). Operating expenses increased by 18.3%, with the implementation of new long-term contracts.

The People ID Division maintains a close watch for all market opportunities, and seeks to maintain strong geographical diversification and a good balance between long and short-term contracts.

People ID

2011

2012

2013

2014

%

49,859

42,608

40,285

54,630

35.6%

In ‘000 € Sales Gross margin

26,959

24,377

23,112

28,819

24.7%

-14,904

-14,490

-15,433

-18,265

18.3%

Current EBITDA

12,055

9,887

7,679

10,554

37.4%

Current EBITDA as % of Sales

24.20%

23.20%

19.1%

19.3%

11,693

9,879

7,552

10,552

39.7%

9,131

7,641

6,159

8,266

34.2%

Operating expenses

EBITDA Current EBIT

The roll-out of ePassports contracts in Belgium (May 2014) and Gambia (December 2014) went ahead as planned. These will generate revenues for the next 5 years at least. To satisfy these so-called "Build and Operate" contracts initially, Zetes needs to invest in development and in the IT and industrial infrastructure.

Thereafter, the Company receives income each time a document is issued for the duration of the contract. These new contracts, along with the biometric visa contracts for Senegal and the Ivory Coast, increase company visibility and structurally increase future business prospects for the division.

People ID

1H 2014

2H 2014

2014

Sales

30,875

23,755

54,630

Gross margin

14,550

14,269

28,819

47.1%

60.1%

52.8%

(9,083)

(9,182)

(18,265)

5,467

5,087

10,554

% Sales

17.7%

21.4%

19.3%

EBITDA

5,467

5,085

10,552

In ‘000 €

Gross Margin as % of Sales Operating expenses Current EBITDA

The half year breakdown highlights the impact of the different contract types on divisional income. If sales were significantly lower in the second half, gross margin was down just € 0.3 million in absolute terms. This is related to the impact of limited margin sales (delivery of hardware equipment) in the first half and the rising importance of long-term contracts, in particular with the start of Belgian passports personalization from May 2014 (100% impact on the second half). Current EBITDA as a percentage of sales was more than 20% in the second half (19.3% over the year), in line with the types of contract undertaken.

3. GROUPE The cost of the Corporate Division amounted to € 3.7 million (+ 7.5% on 2013). Its missions continue to be the definition of strategy, financial control, marketing and acquisitions.

Group sales revenue amounted to €245.3 million. Recurring revenues continue to grow, supported by "rental" solutions, maintenance contracts and consumables sales in Goods ID. In People ID, growth originates from the long-term contracts, the size of which increased further in 2014. Together, these recurring revenues cover around 40% of consolidated revenue.

Non-recurring charges amounted to a net € 1.0 million (€ 0.8 million in 2013). These relate mainly to restructuring in the Goods ID to align the division with its software strategy.

Investments in fixed assets totalled € 5.5 million, up compared to 2013 (€ 4.9 million). This increase relates entirely to the growth of long-term contracts in People ID. Valuation adjustments on inventory (€ 0.4 million) and trade receivables (€ 0.1 million) are in line with the previous year. Amortization of capitalized development costs are up significantly at € 2.3 million, compared with € 1.7 million in 2013. The increase in these development costs, which are amortized over 3 years, reflects efforts made in recent years by the Group.

EBIT reached € 9.8 million (€ 5.1 million in 2013), 65% of which was generated in the second half.

/ 19

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NOTE 4. NON CURRENT COSTS AND INCOME / FINANCIAL RESULT NON CURRENT COSTS AND INCOME In '000 € Restructuring costs Badwill Other non current costs and income Total

2012

2013

2014

(1,280) 81 (8) (1,207)

(693) (127) (820)

(567) (448) (1,015)

The restructuring costs aim to adjust the local structures and to put in place the new organization (strategy of converting bespoke solutions into software products).

The other non current costs consist mainly of employee expenses without economic counterparty (-285 thousand €), the share base payment cost (2014 employees benefit plan / -51 thousand €), as well as the settlement of a dispute with a sub-contractor (-132 thousand €).

The other non current income relates to the exercise of an option for a building (43 thousand €).

FINANCIAL RESULT

2012

2013

2014

In '000 € Interest charges Other financial charges Interest income Other financial income Financial result excluding exchange differences

(224) (324) 71 109 (367)

(256) (357) 27 83 (503)

(277) (299) 100 21 (455)

Exchange losses / conversion differences Exchange gains / conversion differences Exchange differences

(564) 389 (175)

(742) 469 (273)

(623) 512 (111)

Total financial result

(543)

(776)

(566)

/ 20

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NOTE 5. TAXES INCOME TAX

2012

2013

2014

In '000 € Current income tax expenses Deferred tax expenses Income tax

1,694 (264) 1,431

1,504 (569) 935

3,429 (378) 3,051

RECONCILIATION OF STATUTORY TAX TO EFFECTIVE TAX RATE

2012

2013

2014

1,685 4,956 33.99% (121) (332) 560 (383) 23 1,431 28.86%

1,473 4,333 33.99% (193) (160) 179 (409) 45 935 21.59%

3,143 9,247 33.99% (447) (249) 581 (76) 99 3,051 33.00%

In ‘000 € Tax expenses using statutory rate Net profit before taxes Belgian statutory tax rate Tax effect of rates in other jurisdictions Tax effect of notional interest deduction Tax effect of non tax deductible expenses / double taxed income Tax effect of current and deferred tax adjustments Others Tax expenses using effective rate Effective tax rate

DEFERRED TAX ASSETS

2012

2013

2014

In '000 € Intangible assets Tangible assets Inventories Trade receivables Accrued charges Provisions Tax losses carried-forward Total deferred tax assets

(28) 157 32 34 27 43 2,939 3,204

(50) 126 127 28 19 42 4,093 4,385

(60) 131 103 37 29 77 4,566 4,885

DEFERRED TAX LIABILITIES

2012

2013

2014

In '000 € Intangible assets Tangible assets Inventories Trade receivables Construction contracts Deferred charges Total deferred tax liabilities

1,168 277 374 35 1,854

1,395 275 497 383 2,550

1,490 292 20 39 429 428 2,698

Recoverable tax losses The economic and fiscal environments of the various consolidated entities as well as the Business Plan of the Group have been reviewed to assess the recoverability of deferred tax assets. Based on the 2015-2019 BP, management was able to validate that the activated amount was recoverable. In very few cases, more than 5 years were necessary to recover the tax loss; on the other hand, some entities had a greater earnings capacity than the one taken into account, which could have led to additional assets. The management uses the Business Plan for validation purposes. This avoids an over-automatic application of the rule - i.e. the activation of recoverable losses is estimated based on the Business Plan over the next five years. Zetes remains alert to take into account the specificities of the different entities, whether economic or fiscal, as well as the additional resources available that are not necessarily integrated in the Business Plan.

/ 21

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NOTE 6. TANGIBLE ASSETS Buildings

Plants and equipments

Motor vehicles

Fixtures and fittings

Leasehold improvements

Other

Assets leased to third parties

Total

Gross carrying amount

3,637

29,257

3,313

2,623

4,937

2,504

-

46,271

Accumulated depreciation

(449)

(24,169)

(1,598)

(2,296)

(3,226)

(1,513)

Closing balance 2011

3,188

5,089

1,715

327

1,710

990

-

13,020

In ‘000 â‚Ź Balance at 31 December 2011

- (33,252)

Changes in 2012 Additions

11

1,688

756

220

222

137

1,751

4,786

Business combination

-

206

0

17

-

31

-

254

Disposals / cancellations

-

(304)

(567)

(47)

(85)

(16)

-

(1,019)

Conversion differences

-

(13)

(3)

(4)

13

(28)

-

(34)

Reclassifications (to) from other items / other

-

(732)

(25)

(91)

-

(167)

-

(1,016)

Depreciation charge

(155)

(2,295)

(578)

(139)

(320)

(266)

(252)

(4,006)

Depreciation on business combination

-

(167)

(0)

(14)

-

(31)

-

(212)

Depreciation on disposals / cancellations

-

300

436

47

85

10

-

878

Depreciation other

-

777

24

91

(3)

84

-

974

1,751

49,114

Balance at 31 December 2012 Gross carrying amount

3,648

30,099

3,350

2,718

5,088

2,461

Accumulated depreciation

(604)

(25,550)

(1,590)

(2,311)

(3,465)

(1,717)

Closing balance 2012

3,043

4,549

1,760

408

1,623

743

1,499

13,625

Additions

-

3,951

989

300

702

291

646

6,878

Business combination

-

11

-

2

-

-

-

12

Disposals / cancellations

-

(243)

(569)

(24)

-

(67)

(221)

(1,125)

Conversion differences

-

(69)

(14)

(31)

4

(117)

(15)

(242)

(252) (35,489)

Changes in 2013

Reclassifications (to) from other items / other

-

(6)

(37)

(2)

-

5

-

(39)

(156)

(1,689)

(672)

(152)

(349)

(296)

(622)

(3,935)

Depreciation on business combination

-

-

-

-

-

-

-

-

Depreciation on disposals / cancellations

-

238

415

24

-

37

41

755

Depreciation other

-

(149)

42

15

(5)

40

0

(57)

3,648

33,743

3,679

2,958

5,794

2,572

2,161

54,554

Accumulated depreciation

(760)

(27,150)

(1,765)

(2,419)

(3,819)

(1,937)

Closing balance 2013

2,888

6,593

1,914

539

1,974

636

Depreciation charge

Balance at 31 December 2013 Gross carrying amount

(832) (38,681) 1,329

15,873

/ 22

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NOTE 6. TANGIBLE ASSETS (CONTINUED)

Buildings

Plants and equipments

Motor vehicles

Fixtures and fittings

Leasehold improvements

Other

Assets leased to third parties

Total

Additions

2

3,647

605

324

512

153

186

5,429

Business combination

-

5

3

1

-

-

-

8

Disposals / cancellations

-

(208)

(432)

(1)

-

(26)

(1)

(668)

Conversion differences

In ‘000 € Changes in 2014

-

70

6

13

35

17

30

172

Reclassifications (to) from other items / other

(207)

(185)

-

(0)

-

-

185

(207)

Depreciation charge

(154)

(2,168)

(703)

(195)

(422)

(287)

(704)

(4,632)

Depreciation on disposals / cancellations

-

207

307

1

-

24

1

540

163

(109)

(3)

(10)

(12)

(12)

(145)

(128)

3,443

37,071

3,818

3,295

6,341

2,716

2,561

59,244

Accumulated depreciation

(752)

(29,220)

(2,119)

(2,623)

(4,253)

(2,212)

(1,679)

(42,858)

Closing balance 2014

2,691

7,852

1,699

672

2,088

504

882

16,386

Net carrying amount of tangible assets under finance leases

587

342

929

Tangible assets acquired in 2014 under finance leases

141

186

327

Amount of tangible assets pledged as security for liabilities

587

342

929

Depreciation other Balance at 31 December 2014 Gross carrying amount

Balance at 31 December 2014

NOTE 7. INTANGIBLE ASSETS In ‘000 € Balance at 31 December 2011 Gross carrying amount Accumulated depreciation Accumulated impairment losses Closing balance 2011 Changes in 2012 Additions Business combination Conversion differences Cancellation Other Depreciation charge Depreciation on business combination Depreciation cancelled Depreciation other

Goodwill

Development costs

Patents, trademarks and other rights

Computer software

Total

41,439 (1,314) 40,125

15,148 (11,344) 3,804

989 (722) 267

5,190 (3,625) 1,565

62,765 (15,691) (1,314) 45,761

1,834 4 (1,752) -

49 11 2 (229) -

526 206 7 (31) (735) (124)

(1)

(2)

32

2,409 617 13 (718) (678) (2,716) (124) 718 29

399 0 (718) (646)

718

/ 23

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NOTE 7. INTANGIBLE ASSETS (CONTINUED) In ‘000 € Balance at 31 December 2012 Gross carrying amount Accumulated depreciation Accumulated impairment losses Closing balance 2012 Changes in 2013 Additions Business combination Conversion differences Other Depreciation charge Depreciation other Balance at 31 December 2013 Gross carrying amount Accumulated depreciation Accumulated impairment losses Closing balance 2013 Changes in 2014 Additions Business combination Conversion differences Other Depreciation charge Depreciation other Balance at 31 December 2014 Gross carrying amount Accumulated depreciation Accumulated impairment losses Closing balance 2014 Net internally generated intangible assets

Goodwill

Development costs

Patents, trademarks and other rights

Computer software

Total

40,473 (595) 39,878

16,986 (13,096) 3,890

1,051 (954) 97

5,897 (4,451) 1,446

64,407 (18,501) (595) 45,311

2,756 (3) (1,779) 1

140 14 (76) (14)

968 132 (75) (4) (885) 52

3,864 177 (65) (4) (2,740) 39

19,738 (14,874) 4,864

1,205 (1,043) 161

6,918 (5,284) 1,633

68,380 (21,202) (595) 46,583

2,582 11 (2,319) (11)

45 6 (50) (6)

376 73 (169) (824) 116

3,003 109 90 (169) (3,193) 99

40,628 (595) 40,033

22,331 (17,204) 5,127

1,256 (1,099) 156

7,198 (5,992) 1,206

71,413 (24,296) (595) 46,522

-

4,864

46 (0)

40,519 (595) 39,924

109 -

Comments on Goodwill The goodwill increase of 109 thousand € is related to the asset deal of the company Rodata in Austria.

4,864

/ 24

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

Breakdown of the goodwill by segment The goodwill is allocated according to the segment where the acquisitions have been done: Goods ID or People ID. Zetes Group organizes its activity by businesses, each under the authority of a specific manager. It is at this level that strategy, resource allocation, solutions and priority markets are determined. It is also at this level that performance is analysed.

In ‘000 € By segment Goods ID People ID Total goodwill

For each entity, the Group identifies whether it is a "monoactivity" or not. A "mono-activity" is considered to be a separate CGU. Those that are not mono-activity are organised in such a way as to be able to break down analytically their activities, including the assets and liabilities attached thereto.

Each analytical unit then constitutes a CGU. CGUs are then grouped into groups of CGUs that make up the Goods ID and People ID divisions.

The goodwill is allocated to these groups of CGUs. Assets constituting a cash-generating unit are tested for impairment before undertaking an impairment test at the level of the group of CGUs to which the goodwill is allocated.

The Group examines the value of the goodwill shown in the statement of financial position at each annual closing date, or more often whether indications of impairment exists.

The external impairment index used is the market capitalization of the company. The recoverable amount of a cash-generating unit is determined on the basis of fair value, less costs of sales or, where insufficient in respect of goodwill, of value in use. The fair value is calculated based on valuations effective in the industry, namely a multiple of EBITDA adjusted for net cash position.

The cost of sales is estimated at 5% of the value of the entity under review. The value in use is calculated based on projected cash flows derived from the annual budgets as adopted by the Board of Directors, as well as assumptions concerning the evolution of the business over a five-year period.

Cash flows beyond the range of the projections are extrapolated using estimated average growth rates, as indicated below.

Estimated cash flows do not include incoming and outgoing cash flows from financing activities or related to income taxes.

Past flows are compared to estimated projections.

The key assumptions used in the tests are the same for all CGUs. The weighted average cost of capital before taxes applied by the Group to all CGUs is compared with different sources and is updated periodically, but not whenever an impairment test is carried out. Between each update, the Group verifies that the key variables used in determining the WACC (applied in its activity segment) have not changed significantly.

2012

2013

2014

VAR.

36 569 3 309 39 878

36 615 3 309 39 924

36,724 3,309 40,033

109 109

Key assumptions used in calculating value in use:

2014 Discount rate Growth rate (1) Illiquidity discount

10% 1% 15%

(1) After the five-year period

Sensitivity analysis The Group conducts a sensitivity analysis, with an emphasis on the key assumptions; these are the EBITDA multiplier used to determine the fair value and the growth forecasts used to determine the value in used (elaboration of different scenarios).

The analysis done in 2014 shows that the carrying value of both divisions is lower than their fair value and their value in use.

/ 25

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NOTE 8. FINANCIAL ASSETS AND OTHER NON CURRENT ASSETS ASSETS In '000 € Other non current financial assets Non current cash restricted or pledged Long term trade receivables Total

2012

2013

2014

164 392 556

213 351 2,141 2,705

117 390 1,559 2,066

NOTE 9. INVENTORIES ASSETS

2012

2013

2014

In '000 € Total gross carrying amounts Goods Production supplies Stock in transit Accumulated write-downs Goods Production supplies Total net

20,382 15,129 3,921 1,332 (4,751) (4,499) (252) 15,631

19,186 15,273 3,644 269 (4,884) (4,772) (113) 14,302

22,022 17,671 4,091 260 (4,876) (4,688) (188) 17,146

INCOME STATEMENT

2012

2013

2014

In '000 € Write-downs on inventories of the year

(381)

(638)

(354)

/ 26

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NOTE 10. CURRENT TRADE AND OTHER RECEIVABLES ASSETS In '000 € Trade receivables Gross trade receivables Accumulated write-downs Other current receivables Construction contracts Hedging instruments Other Total

2012

2013

2014

53,852 55,038 (1,187) 3,872 1,556 2,317 57,724

54,183 55,560 (1,376) 3,802 2,356 1,446 57,986

63,974 65,115 (1,140) 3,648 2,065 81 1,503 67,623

The credit risk is not significant at the Group level. The risk is spread on lots of different customers and markets. It is partly covered by a credit insurance company. If not, a credit risk analysis is performed allowing to reduce the risk of the counterparty.

Construction contracts Cumulative amount of contract costs incurred and recognized profits less losses

144,202

166,716

30,939

The decrease in 2014 relates to the fact the IAS 11 is applicable to a fewer number of contracts (People ID division).

INCOME STATEMENT In '000 € Revenue relating to the execution of construction contracts Write-downs on bad and doubtful customers

2012

2013

2014

24,137 (157)

22,513 (185)

5,717 (62)

HEDGING INSTRUMENTS Sale EUR

Purchase USD

Expiring from

Expiring to

1,577

2,012

Jan-15

Fév-17

In ‘000 Forward contracts EUR / USD

Contract average rate 1.276

Closing rate 31/12 1.214

The Group has hedging instruments to hedge identified foreign exchange risks; on 31/12/2014, there are hedging contracts for an amount of 2.0 million USD against EUR to be purchased at an average rate of 1.276. The net result on hedging instruments is 60 thousand € and is mentioned in the Statement of Changes in equity.

NOTE 11. RELATED PARTIES

In ‘000 € Assets with related parties (1) Liabilities with related parties Transactions within related parties Total Management Committee remunerations Basic compensation Variable compensation Total non executive directors remunerations Total others (2) Total services received

2012

2013

2014

46 128

46 234

50 570

(876) (738) (138) (74) (20) (969)

(967) (756) (211) (82) (20) (1,068)

(1,521) (781) (740) (74) (20) (1,615)

(1) Current accounts of executive directors (2) Lawyers services

All transactions with companies related to directors have been made at arm's length.

The remuneration report is available in the "Corporate Governance" section of the annual report.

/ 27

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NOTE 12. EQUITY NOTE MOVEMENTS IN NUMBER OF SHARES

Ordinary shares

Number of shares on 31/12/2013 Number of shares issued in 2014 Number of shares on 31/12/2014

5,389 714 0 5,389 714

OWN SHARES

Number

Own shares, opening balance Employees benefit plan Purchases 2014 Own shares, closing balance

234,322 (38,550) 71,164 266,936

In ‘000 € 3,502 (633) 1,564 4,433

In 2014, the Board of Directors decided to buy own shares, in accordance with the authorization given by the Shareholders' General Meeting. During the first semester, an employee benefit plan was decided on. In this context, 38,550 shares were sold at a price of € 16.43 (two-year blocking period).

Other informations All issued shares are fully paid. The articles of association authorise the Board of Directors to increase the issued capital for an amount of maximum € 51.7 million. All shares are without par-value.

Dividend The Board of Directors will propose to the Ordinary General Assembly held on 27 May 2015 to pay a gross ordinary dividend of € 0.63 per share, compared with € 0.55 in respect of 2013.

The proposed dividend has not been recognised as a liability at the end of 2014.

EARNINGS PER SHARE CALCULATION

Continuing operations

Total

Net profit (basic) The net profit per share is calculated by dividing the net result of the Group by the weighted average number of ordinary shares outstanding during the year.

Net profit of the Group (in '000 €) Weighted average number of ordinary shares outstanding Basic earnings per share (in €)

6,237 5,162 665 1.21

6,237 5,162 665 1.21

Net profit (diluted) For the calculation of the diluted earnings per share, the weighted average number of ordinary shares is adjusted to take into account the conversion of all dilutive equity instruments. At the end of 2014, the outstanding number of options is 168.871. The weighted average listing price is 21.19 € (2014) ; because it does not exceed the exercise prices, the options are not taken into account to compute the dilution effect.

Net profit of the Group (in '000 €) Weighted average number of ordinary shares outstanding Adjustments for options

6,237 5,162 665 -

6,237 5,162 665 -

Weighted average number of ordinary shares for diluted earnings per share

5,162 665

5,162 665

1.21

1.21

Diluted earnings per share (in €)

/ 28

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

OPTIONS

Exercise price Outstanding on 31/12/2013 Granted during the period Exercised during the period Cancelled Outstanding on 31/12/2014 Of which vested Of which to be vested Expiring date

PLAN 2005

PLAN 2007

TOTAL

23.00 181,869 (15,798) 166,071 166,071 21/11/17

22.63 2,800 2,800 2,800 22/06/19

184,669 (15,798) 168,871 168,871 -

There were no options granted in 2014. In accordance with the decision of the Extraordinary General Assembly held on 28 May 2014, the Board of Directors may decide, at its discretion, to assign to the beneficiaries, for any exercise of options, either existing shares (own shares) or new shares.

31/12/2014 SHAREHOLDERS STRUCTURE (WITHOUT EXERCISE OF OPTIONS) Shareholders

Number of shares

%

Zephir (concert with Cobepa)

1 277 495

23.70%

Cobepa (concert with Zephir)

1 329 655

24.67%

Ratio Capital Management BV

210 000

3.90%

Axa Belgium

199 453

3.70%

8 041

0.15%

38 550

0.72%

2 059 584

38.21%

266 936

4.95%

5 389 714

100.00%

Other nominative shareholders Employees Public Own shares Total

NOTE 13. FINANCIAL BORROWINGS FINANCE LEASES, MINIMUM LEASE PAYMENT PAYABLE, PRESENT VALUE In '000 € < 1 year Between 2 and 5 years Total

NON CANCELLABLE FUTURE MINIMUM OPERATING LEASE PAYMENTS In '000 € < 1 year Between 2 and 5 years Total

INTERESTS BEARING BORROWINGS In '000 € Bank borrowings Finance leases Bank overdrafts Total

2012

2013

2014

156 215 370

239 221 460

308 792 1,100

2012

2013

2014

4,662 5,433 10,095

4,627 5,457 10,084

4,982 5,472 10,454

2012

2013

2014

2,042 370 3,307 5,719

3,975 460 9,469 13,904

2,700 1,100 11,199 15,000

/ 29

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NON-INTERESTS BEARING BORROWINGS

2012

2013

2014

214 214

-

-

2012

2013

2014

4,921 1,012 5,933

10,983 2,921 13,904

14,208 792 15,000

2012

2013

2014

4,705 202 791 20 5,719

13,495 400 9 13,904

14,963 36 15,000

2012

2013

2014

In '000 € Total financial debts Cash available Net cash (-) / net financial debt (+)

5,719 (13,189) (7,471)

13,904 (10,936) 2,968

15,000 (16,680) (1,680)

Current financial debts Cash and cash equivalents Current net cash (-) / current net financial debt (+)

4,921 (12,797) (7,877)

10,983 (10,585) 397

14,208 (16,290) (2,083)

In '000 € Other non current borrowings Total

AGING PROFILE In '000 € < 1 year Between 2 and 5 years Total

FINANCIAL DEBTS BY CURRENCY In '000 € EUR GBP CHF ZAR Total

FAIR VALUE OF FINANCIAL DEBTS For floating rate financial debts, the fair value is equal to the face value.

NET CASH

The net cash is the difference between the total financial debts and the cash available.

The current net cash is the difference between the current financial debts and the cash and cash equivalents.

CASH AVAILABLE In '000 € Current cash restricted or pledged Cash and cash equivalents Total cash available

2012

2013

2014

392 12,797 13,189

351 10,585 10,936

390 16,290 16,680

/ 30

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NOTE 14. PROVISIONS & OBLIGATIONS PROVISIONS Warranty provisions

Restructuring provisions

Legal proceeding provisions

Onerous contract provisions

Total

Balance at 31 December 2011 Non current provisions Current provisions

363 363 -

324 324

296 233 63

100 100 -

1 083 696 387

Additional provisions Amounts used Unused amounts reversed Other

115 (12) 0

193 (324) (4)

10 (109) (125)

56 -

374 (324) (121) (128)

Balance at 31 December 2012 Non current provisions Current provisions

467 467 -

188 74 114

73 73 -

156 156 -

885 771 114

Additional provisions Amounts used Unused amounts reversed Other

20 (42) 4

0 (114) (39) (9)

(33) -

127 -

148 (147) (81) (5)

Balance at 31 December 2013 Non current provisions Additional provisions Amounts used Unused amounts reversed Other

449 449 28 (128) 3

27 27 1 (23) -

40 40 180 (39) -

284 284 100 -

800 800 308 (62) (128) 3

Balance at 31 December 2014 Non current provisions

351 351

6 6

181 181

383 383

921 921

In ‘000 €

The warranty provisions cover the company costs for the defective equipments not under the producer guarantee.

The legal proceeding provisions mainly relate to disputes with former employees. The onerous contract provisions cover the not-normal costs related to agreements.

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

/ 31

OBLIGATIONS In '000 â&#x201A;Ź Balance at 31 December 2011 Non current obligations Current obligations

Post employment benefit obligation 222 192 31

Additional provisions Amounts used Conversion differences

90 (38) 0

Balance at 31 December 2012 Non current obligations Current obligations

274 241 33

Additional provisions Amounts used Conversion differences

18 (76) 1

Balance at 31 December 2013 Non current obligations Current obligations

217 192 24

Additional provisions Amounts used Conversion differences

11 (24) 0

Balance at 31 December 2014 Non current obligations Current obligations

204 179 26

CONTINGENT LIABILITIES On 31/12/2014, the Group has contingent liabilities with uncertainty on timing and/or amount, arising in the course of the business.

The contingent liabilities relate to possible obligations in respect of certain warranties given to bankers, customers, suppliers and partnerships. The possibility of an outflow of resources embodying economic benefits is remote.

DEFINED CONTRIBUTION PLANS Zetes operates various post employment benefit plans in accordance with the local conditions and practices of the countries in which it operates. Those plans are predominantly contracted with external insurance companies. The contributions to these insurance plans are funded by payments from employees and the relevant group's companies. In Belgium, the legislation provides that the employer must guarantee a return for the contributions of the employer and the employee, which creates a potential liability for the Group. Because of this guaranteed return, the Belgian defined contribution plans can be considered as defined benefit plans. In accordance with market practice, Zetes uses the "intrinsic value" method to estimate its obligations in this regard; they are equivalent to the difference between mathematical reserves (acquired) and guaranteed amounts based on the minimum legal returns. On 31/12/2014, the acquired reserves cover the guaranteed amounts. The payments to defined contribution plans charged as an expense in 2014 amount to â&#x201A;Ź 1.461 thousand.

/ 32

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NOTE 15. CURRENT TRADE AND OTHER CURRENT PAYABLES In ‘000 € Trade payables Advances received Other current payables Payables to employees Payables to public administrations Other Current hedging instruments Total

2012

2013

2014

31,524 23,006 13,638 5,495 6,508 1,636 17 68,185

28,957 22,758 14,144 5,535 6,696 1,913 47 65,905

37,859 28,513 14,973 6,095 6,795 2,083 81,346

2012

2013

2014

167 42 94 30 877 178 361 47 290 331 304 23 4

144 12 132 6 6 46 46 -

8 8 3 3 -

712

104

11

318 399 (81) (290) 740 -

46 46 150 -

109 109 120 -

NOTE 16. ACQUISITIONS ET CESSIONS DE FILIALES Impact of acquisitions In ‘000 € Non current assets Tangible assets Intangible assets Deferred tax assets Current assets Inventories Trade and other receivables Prepayments Cash and cash equivalents Current liabilities Trade and other current payables Advances received Other current liabilities Net identifiable assets and liabilities Goodwill on acquisitions and earnouts Goodwill on acquisitions Badwill on acquisitions Cash (acquired) / disposed Net cash outflow / (inflow) Minority interests

2014 & POST CLOSING TRANSACTIONS Zetes acquired in 2014 the assets of the company Rodata which is fully integrated into Zetes Austria. The net assets & liabilities of this acquisition amount to 11 thousand €. Their book value before the business combination is the same. There are no post closing transactions in 2015.

/ 33

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

NOTE 17. AUDITOR'S MISSIONS The auditor RSM Réviseurs d’Entreprises, represented by M. Laurent Van der Linden and M. Thierry Dupont, has been appointed by the 2014 Shareholders Meeting. It will expire at the 2017 Shareholders Meeting held to approve the 2016 accounts.

The mission and powers of the auditor are those granted by the law.

The Auditor may not be revoked by the Shareholders' Meeting other than for good reason.

2012

2013

2014

Auditor's fees Audit of the financial statements Other missions

84 2

84 -

86 -

Auditor's related parties' fees Audit of the financial statements Fiscal advices Other missions

4 12 -

6 -

8 -

In ‘000 €

/ 34

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

Management of risks and uncertainties Introduction

Litigation risks

Risk taking is inherent in any business enterprise. There is no growth or value creation in a company without taking risks.

If not properly managed and controlled, these risks may affect the Company's ability to achieve its objectives. By continuing to foresee and manage risks, risk management and internal control systems play a key role in conducting and monitoring various business activities.

Zetes is, has already been, and could again be involved in legal action which is part of the normal course of business. Such legal action can relate to :

Risk is the possibility of an event occurring that will have consequences that may affect the company's employees, assets, environment, objectives or reputation.

Risk management is the responsibility of all players in the company. It aims to be comprehensive and cover all activities, processes and assets of the company.

- warranty / product quality / installation issues - conflicts with employees - conflicts with the selling shareholders in the context of business combinations - claims by Zetes against suppliers - third party claims for patent infringement The above list is not exhaustive. Where necessary, provisions are set up for such risks. Although these are estimated based on the company’s best understanding of the situation, court judgements could expose the company to unexpected costs.

Risk management is a dynamic system of the company, which it defines and implements under its responsibility.

Risks related to human resources

Risk management comprises a set of tools, behaviours, procedures and actions adapted to the characteristics of each company, that allows senior management to keep the risks to an acceptable level.

Zetes seeks to be at the sharp edge of technology. Finding the human resources with which to remain there is a major challenge.

Zetes’ good name and its commercial and operational successes significantly reduce this risk.

Risk management helps to: a) Create and preserve the value, assets and reputation of the company b) Place the company's decision making and processes on a firmer basis and help it achieve its objectives c) Promote coherence between a company's values and actions d) Mobilize company employees around a common vision of the principal risks and sensitize them to the risks inherent in their business.

Description of the risks The Board of Directors presents below its assessment of the risks to which the company is exposed By the nature of its commercial activities, the company is exposed to the uncertainties attached to the development of the economy and to the situation of its customers and its competitors. Each of the risks listed below can have a negative impact on the overall condition of the company and its results. For this reason any forward-looking statements must be analysed in the light of this presentation. Besides the risks mentioned here, there may be other risks the company is not aware of, or which are not reported as such, but which could also have an adverse effect on the company.

Environmental risks Zetes strictly respects all laws and regulations governing the protection of the environment. Even so, certain exceptional circumstances or accidents could potentially expose the company to litigation. The group is not involved in any environmental dispute at the present time.

Risks related to exceptional events By its very nature the company is open to such risks. A fire or flood could always affect a production site, and with it the company’s financial situation. Although Zetes insures against risks, there is no such thing as “zero” risk. More generally, there are natural and political risks that could destabilize the economic system, and hence Zetes’ activity.

Risks attached to acquisitions Zetes’ strategy involves acquiring other companies. Despite the care with which management goes about these acquisitions and, in particular, the due diligence audits that are made, specific risks always exist. The most serious are linked to the process of integrating newly acquired companies into the group, to their activities before joining Zetes, to their real growth potential (over-estimation) and to the value of the technological know-how acquired. In certain cases, these risks could engender a loss of goodwill value.

/ 35

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

Risks attached to new products

Liquidity and treasury risk

Zetes specialises in identification. To maintain its competitive advantage, Zetes carries out specific development and places specialized software and hardware on the market. In 2014 the company invested € 2.6 million. A total of € 5.1 million of development expenses are capitalised on the balance sheet. The risks associated with these developments are:

Zetes’ liquidity and treasury risk is limited. In addition to a cash position of € 16.3 million (December 2014), the company retains a significant borrowing potential based on an agreement signed with its three main bankers to finance projects, additional working capital needs or, partially, acquisitions.

- over-ambitious sales objectives, insufficient profitability, owing to unsuitable functionalities, or the existence of less expensive competing products

Foreign exchange risk

- the placing on the market of products that are not yet stabilized, bringing a loss of credibility and/or additional, unanticipated expenses to resolve the problem - the use of external components of insufficient quality.

Technological risk For Zetes, technological risk is linked to the time at which a new technology is adopted. This risk is managed by a specific team, which acts as a technology watch units. This team concentrates expertise and knowledge as long as the technology is not yet ready for market. It also helps disseminate know-how and competencies once a decision to go to market has been taken by Group management.

Risk of fraud The risk of fraud is inherent in all human activity. The company is attentive to appoint people of trust to key positions. This trust is considered the cornerstone of the fight against fraud.

The company seeks, where the size of the subsidiary permits, to establish a separation of duties. Thus, persons in charge of procurement will not be responsible for paying bills. Limits on signing authority are also set according to the activity level of the companies concerned. Finally, the group Executive Management is careful to limit the representative powers of the Executive Managements of the subsidiaries to day-to-day operations. It is also careful to ensure an appropriate division of powers within their management structures. To this end, direct communication channels exist with the group Executive Management, both for local financial managers, who report both to their Country Managers and CFO, and for country managers, who are responsible for their performance to both the Group CEO and the Group CFO.

Price risk This risk is covered principally by agreements with our main suppliers; price reviews are built into our contracts with them.

Credit risk This risk is covered by a credit insurance company (around 50% of sales). Otherwise, an internal analysis of the credit risk is carried out, which reduces the counterparty risk. The multiplicity of clients, both geographical and sectoral, and their general quality also significantly reduce the Group's credit risk.

The consolidated accounts are in euros. This means that the accounts of those group entities whose reference currency is not the euro need to be converted into euros on consolidation.

To the extent that currencies fluctuate against one another this can negatively impact the accounts. The greatest risks are those of the fluctuation of the euro against the pound sterling, the Swiss franc, the rand and the shekel. At the operating level, and insofar as the charges of these entities are incurred in their own reference currencies, the currency risk lies essentially in their contribution to Group results. A risk also exists on loans/ borrowings (repayment or revaluation). A potential risk also exists in the parity between the CFA and the euro.

In terms of buying, procurement is essentially in euros. There does exist, however, a US dollar risk for certain specific equipment that is purchased in this currency. Significant sales / purchase contracts in foreign currencies are normally hedged specifically.

Zetes’ financial department has a preference for forward foreign exchange contracts and, to a lesser extent, currency options, for hedging foreign exchange risk.

In People ID, some of Zetes' competitors use other currencies than the euro as their reference currency. Currency fluctuations may either strengthen Zetes' competitive advantage or weaken it against those competitors whose revenues (and costs) are collected (and incurred) in other monetary areas

Interest rate risk The interest rate risk is limited to the extent that the company has net positive treasury position. A rise in either short or long term rates would not significantly affect results. On top of this, bank debt serves mainly to fund short term working capital needs of subsidiaries. The occasional longer term debts for financing acquisitions or investments have a short average duration which does not call for specific interest rate coverage.

/ 36

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

ZETES INDUSTRIES SA STATUTORY AUDITOR’S REPORT TO THE GENERAL MEETING OF SHAREHOLDERS ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2014 As required by law and the by-laws, we report to you on the performance of our mandate of statutory auditor. This report includes our opinion on the consolidated financial statements, as well as the required additional statement. The consolidate financial statements comprise the consolidated statement of financial position as at 31st December 2014, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year ended on 31st December 2014 and the explanatory notes.

REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS – UNQUALIFIED OPINION We have audited the consolidated financial statements of the company for the year ended on 31st December 2014, prepared in accordance with the International Financial Reporting Standards as adopted by the European Union, which show a consolidated statement of financial position total of € 184.474 (000) and a consolidated statement of comprehensive income showing a consolidated profit for the year of € 6.474 (000).

Responsibility of the board of Directors for the preparation of the consolidated financial statements The board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards, and for such internal control as the board of Directors determines is necessary to enable the preparation of annual accounts that are free from material misstatement, whether due to fraud or error.

estimates made by the board of Directors, as well as evaluating the overall presentation of the consolidated financial statements.

We have obtained from the board of Directors and company officials the explanations and information necessary for performing our audit.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Unqualified opinion In our opinion, the consolidated financial statements of the company give a true and fair view of the group’s equity and financial position as at 31st December 2014, and of its results and its cash flows for the year then ended, in accordance with the International Financial Reporting Standards as adopted by the European Union.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS The board of Directors is responsible for the preparation and the content of the Director’s report on the consolidated financial statements.

In the context of our mandate and in accordance with the Belgian standard which is complementary to the International Standards on Auditing (ISAs) as applicable in Belgium, our responsibility is to verify, in all material respects, compliance with certain legal and regulatory requirements. On this basis, we make the following additional statement, which do not modify the scope of our opinion on the consolidated financial statements: • The Director’s report the consolidated financial statements includes the information required by law, is consistent with the consolidated financial statements and is free from material inconsistencies with the information that we became aware of during the performance of our mandate.

Responsibility of the statutory auditor Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISAs). Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

Zaventem, 14 April 2015

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the statutory auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the statutory auditor considers the company’s internal control relevant to the preparation of consolidated financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting

LAURENT VAN DER LINDEN

RSM RÉVISEURS D'ENTREPRISES BEDRIJFSREVISOREN CVBA-SCRL REPRESENTED BY THIERRY DUPONT

/ 37

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

Statutory Accounts In accordance with article 105 of the Company Code, the current Annual Report offers an abbreviated version of the statutory annual accounts of Zetes Industries SA. Zetes Industries SA’s Annual Report and the annual accounts, together with the Auditor’s Report, will be deposited and will also be available at the Company’s registered office and on the Company Web site www.zetes.com.

The Company Auditor has signed a statement of unqualified approval of the statutory annual accounts of Zetes Industries SA for the years ended 2014, 2013 and 2012.

1. BALANCE SHEET In ‘000 € ASSETS Fixed assets Formation expenses Intangible fixed assets Tangible fixed assets Financial fixed assets Current assets Amounts receivable after one year Stocks and contracts in progress Amounts receivable within one year Short term deposits and own shares Cash at bank and in hand Deferred charges and accrued income TOTAL ASSETS

2012

2013

2014

32,375 309 95 31,971 31,890 1,225 13 27,051 3,319 135 148 64,265

32,249 427 149 31,673 33,297 1,256 84 28,159 3,569 123 105 65,546

32,860 273 213 32,374 35,737 1,173 51 28,760 4,479 936 339 68,597

60,303 56,092 38 783 3,319 69 3,962 3,918

57,996 51,676 38 2,707 3,569 5 7,550 2,700 4,800

59,369 51,676 38 3,027 4,479 148 9,228 9,094

-

-

-

20 1,113 514 2,271 45 64,265

1,126 503 3,172 50 65,546

3,025 1,372 1,317 3,381 134 68,597

EQUITY AND LIABILITIES Capital and reserves Capital Share premium account Reserves Unavailable reserves for own shares Profit carried forward Provision for liabilities and charges Debts Amounts payable after one year Amounts payable within one year Current portion of amounts payable after more than one year falling due within one year falling due within one year Financial debts Trade debts Amounts payable regarding taxes, remuneration and social security Other debts Accrued charges and deferred income TOTAL EQUITY AND LIABILITIES

/ 38

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

2. INCOME STATEMENT

2012

2013

2014

5,744 5,351 392 (5,093) (107) (2,942) (1,892) (136) (16) 651 517 (81) 1,087 1,087 (33) 1,054

5,797 5,369 428 (5,575) (79) (3,551) (1,766) (166) (12) 222 1,396 (103) 1,515 (47) 1,468 (3) 1,466

7,713 7,100 613 (6,475) (103) (4,030) (2,079) (256) (7) 1,238 3,821 (132) 4,927 4,927 (327) 4,601

3. APPROPRIATION ACCOUNT

2012

2013

2014

In ‘000 € Profit to be appropriated Profit for the year available for appropriation Profit brought forward Drawdowns on reserves Transfers to legal reserve Transfers to other reserves Result to be carried forward Dividends (1)

1,264 1,054 211 817 53 69 1,959

1,535 1,466 69 1,400 73 (0) 5 2,857

4,606 4,601 5 230 1,000 148 3,227

In ‘000 € Operating income Turnover Other operating income Operating charges Raw materials, consumables and goods for resale Services and other goods Remuneration, social security and pensions Depreciation and amounts written off Other operating charges Operating profit or (loss) Financial income Financial charges Profit on ordinary activities before taxation Extraordinary income Extraordinary charges Profit for the period before taxation Income taxes PROFIT OF THE YEAR

(1) Amount determined on the basis of the treasury shares held at 31/12/2014 ; for 2013 it is the amount of dividends adjusted to take into account the own shares held at the Ordinary General Meeting.

/ 39

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

4. INVESTMENTS AND SOCIAL RIGHTS HELD IN OTHER COMPANIES Are to be mentioned hereafter, the companies in which the company holds a direct investment in the sense of the Royal Decree of October 8, 1976 as well as the other companies in which the company holds shares in case these shares represent at least 10% of the subscribed capital.

RIGHTS HELD BY Name SA ZETES SA ZETES France SA ZETES TECHNOLOGIES ZTS Lda SA BUROTICA SA ZETES FASTRACE ZETES INTERNATIONAL GmbH ZETES SRL ZETES INDUSTRIES (Israel) Ltd ZETES HOLDING GmbH RFIdea SA ZETES COTE IVOIRE

Address of the registered office

Country Nombre 170 827

Directly % 100

27 470

100

Rue de Strasbourg 3 - 1130 Bruxelles Bâtiment Einstein - 17/19 rue Georges Besse92160 Antony Rue de Strasbourg 3 - 1130 Bruxelles Alameda Antonio Sergio 7 - 2795023 Linda-A-Velha Alameda Antonio Sergio 7 - 2795023 Linda-A-Velha Rue de Strasbourg 3 - 1130 Bruxelles

Belgium

Belgium Portugal Portugal Belgium

1 249 2 10 millions 2 124

49.96 100 50 34.03

Flughafenstraße 52 b, 22335 Hamburg

Germany

4

100

Lungobisagno Dalmazia 71/16 - 16141 Genova

Italy

10

10

1 Hanagar street - 45241 Hod Hasharon

Israël

1 000

100

Waldstrasse 23 - 63128 Dietzenbach Rue des Chasseurs Ardennais, 5 - 4031 Angleur Lot N° 124, Vridi Cité, Port-Bouët, Abidjan

Germany Belgium Ivory Coast

2 3 190

100 ns 10

France

Indirectly %

0.04 50 41.9

90

100 90

5. STATEMENT OF CAPITAL Capital

In ‘000 €

1. Issued capital At the end of the preceding period Changes during this period: At the end of the period 2. Structure of the capital Registered shares, bearer and dematerialized shares Registered Bearer and dematerialized

Number of shares

51,676 51,676 5,389 714 1,337 696 4,052 018

SHAREHOLDER STRUCTURE BASED ON NOTIFICATION IN DECEMBER 2014 Shareholders Zephir Cobepa Ratio Capital Management BV Axa Belgium Other nominative shareholders Employees Public Own shares Total

Number of shares

%

1,277 495 1,329 655 210,000 199,453 8,041 38,550 2,059 584 266,936 5,389 714

23.70 24.67 3.90 3.70 0.15 0.72 38.21 4.95 100.00

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

/ 40

6. AUDITORS In ‘000 € Auditor fees Fees relating to extraordinary services or specific missions rendered to Zetes Industries SA Fees relating to extraordinary services or specific missions rendered to Zetes Industries SA by parties related to the auditor Other certification missions Tax advices Other missions out of certification

2014 43 -

5 5 -

/ 41

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

Statement on Corporate Governance 1. The 2009 Belgian Code on Corporate Governance

Principle 5.2. /17 Internal audit

This section is based on the rules and the principles which organize the corporate governance of Zetes Industries SA/NV (the Company). These are listed exhaustively in the Company's Corporate Governance Charter as approved by the Board of Directors of the Company and available, along with the Company’s coordinated articles of association, on the Zetes Industries SA/ NV website (www.zetes.com/en/investor-relations/corporategovernance).

The company does not have an independent internal audit function. Taking into account the nature, size and complexity of the company, executive management has established rules and procedures and has divided up responsibilities between different people in order to ensure the proper functioning of its internal control and risk management system.

The Company’s Board of Directors intends to comply with the 2009 Belgian Code on Corporate Governance, but believes that certain deviations from its provisions are justified in view of the Company’s particular situation.

2.1. Composition, appointment and termination of the Board of Directors

Principle 2.9. Secretary of the Company Given the size of the Company, the Board of Directors does not plan to appoint a Company secretary.

Principle 5.3. Appointments Committee None of the principles relating to the Appointments Committee are applicable.

Name and position

2. BOARD OF DIRECTORS:

In accordance with article 15 of the articles of association, the Company is managed by a six members minimum Board of Directors consisting of legal or physical persons, who do not have to be shareholders.

Pursuant to the articles of association, the Directors are appointed by the General Meeting of Shareholders for a term of maximum 6 years and are re-eligible. Their terms of office expire at the end of the Ordinary General Meeting following the last year of their term.

As of 31 December 2014, the Board of Directors of Zetes Industries SA/NV consisted of 10 persons. The Ordinary General Meeting of 27 May 2015 will decide on the appointment of all directors for their next term.

Term until(**) Professional Address

Alain Wirtz SA Represented by Mr Alain Wirtz Chief Executive Officer (CEO) (Nominated by Zephir Corporation) (Executive Director)

2015

Rue de Strasbourg 3 1130 Brussels

Jean-François Jacques SPRL Represented by Mr Jean-François Jacques Chairman of the Board(*), (Nominated by Zephir Corporation) (Executive Director)

2015

Rue de Strasbourg 3 1130 Brussels

Pierre Lambert Chief Financial Officer (CFO) (Executive Director)

2015

Rue de Strasbourg 3 1130 Brussels

Jean-Marie Laurent Josi (Nominated by Cobepa) (Director)

2015

Rue de la Chancellerie 2 1000 Brussels

Hiram Claus (Nominated by Cobepa) (Director)

2015

Rue de la Chancellerie 2 1000 Brussels

Olivier Gernay (Nominated by Zephir Corporation) (Director)

2015

Avenue Brugmann 403 1180 Brussels

Floris Vansina BVBA Represented by Mr Floris Vansina (Director)

2015

Charles Woestelaan 147 1090 Jette

José-Charles Zurstrassen (Independent Director)

2015

Avenue Général Baron Empain 41 1150 Woluwe-Saint-Pierre

Paul Jacques (*) (Independent Director)

2015

Rue du Ham 20 1180 Brussels

GEMA SPRL Represented by Mr Michel Allé (Independent Director)

2015

Place Constantin Meunier 17 1190 Brussels

(*) Mr Paul Jacques and Mr Jean-François Jacques are unrelated. (**) The term of office of directors ends immediately after the Annual General Meeting of shareholders held in the year mentioned next to the director's name.

/ 42

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

The statutory auditor of the Company is RSM Réviseursd’Entreprises - Bedrijfsrevisoren, having its registered office at Chaussée de Waterloo 1151, 1180 Uccle, represented by Mr Laurent Van der Linden and Mr Thierry Dupont. This firm has audited the Company’s consolidated accounts since 2000, while introducing a rotation of its representatives. Mr Laurent Van der Linden and Mr Thierry Dupont are responsible for auditing the Company's statutory (unconsolidated) and consolidated accounts.

The three-year mandate of the statutory auditor will expire at the General Shareholders’ meeting that will be held of 21 May 2017.

2.2. Role of the Board of Directors The Board of Directors is the decision-making body of Zetes Industries SA/NV, (i) with the exception of matters reserved to the shareholders by law or on the basis of the articles of association, and (ii) with the exception of the management powers delegated to the Managing Directors.

The Board of Director’s role is to pursue the long-term success of Zetes Industries SA/NV and the Zetes Group by providing entrepreneurial leadership and enabling risks to be assessed and managed. The Board of Directors decides on Zetes Industries SA/NV’s values and strategy, its risk appetite and key policies.

The Board of Directors ensures that the necessary financial and human resources are in place for Zetes Industries SA/NV to meet its objectives.

2.3. Responsibilities of the Board of Directors The key responsibilities of the Board of Directors include: • Reviewing, evaluating and approving, on a regular basis, long range plans and strategy for Zetes Industries SA/NV and the Zetes Group; • Reviewing periodically Zetes Industries SA/NV’s corporate objectives and policies; • Monitoring and evaluating the performance of Zetes Industries SA/NV and the Zetes Group against strategic goals, plans and budgets; • Reviewing, evaluating and approving the overall corporate organisational structure; • Reviewing, evaluating and approving major resource allocations and capital investments (including acquisitions and divestments); • Reviewing the financial and operating results; • Reviewing, evaluating and approving budgets and forecasts; • Taking all necessary measures to ensure the correctness and the timely publication of financial reports and other significant financial and non-financial information; • Supervising the performance of the external auditor; • Appointing the Managing Directors; • Deciding on the Executive Management structure; • Reviewing Executive Management performance; • Maintaining continuing interaction and dialogue and a climate of respect, trust and candour with the Executive Management; • Reviewing, evaluating and approving the remuneration policy as it relates to the Executive Management of Zetes Industries SA/NV; • Monitoring and reviewing the effectiveness of the Board committees.

2.4. Organisation of the Board of Directors 2.4.1. Board Meetings Regular Board meetings are held, at least approximately six times a year, with special meetings convened as necessary by the Chairman of the Board of Directors or two Directors.

Board meetings may also be organised by means of video- or teleconference. Each meeting is chaired by the Chairman of the Board of Directors and, in his absence, by the CEO or by an executive Director. The Board of Directors can only validly deliberate and decide if at least half of its members are present or represented. Resolutions are taken by a simple majority of the votes cast.

In 2014, the Board of Directors met 6 times. The attendance of individual directors was as follows: all members attended all meetings except for ALAIN WIRTZ SA, represented by Mr Alain Wirtz (27 August 2014), Mr Olivier Gernay (13 February and 27 August 2014), Mr Hiram Claus (23 June 2014), Mr Jean-Marie Laurent Josi (1 April and 19 December 2014) and Mr José-Charles Zurstrassen (18 March, 23 June and 27 August 2014).

2.4.2. Agenda Items for Board Meetings The Chairman of the Board of Directors establishes the agenda for each Board meeting. At the beginning of the year the Chairman of the Board of Directors establishes a schedule of the main topics to be discussed during the year. A detailed agenda and, to the extent feasible, supporting documents and proposed resolutions are provided to the Directors five calendar days prior to each Board meeting. The agenda lists the topics to be discussed and specifies whether they are for information, for deliberation or for decision-making purposes. Directors review these materials in advance of the meeting. Each Director is free to suggest the inclusion of items on the agenda. Subject to any applicable notice requirements, Directors who have suggestions for topics to be included in the agenda are required to advise the Chairman of the Board of Directors well in advance of such meetings.

2.4.3. Assessment Under the leadership of its Chairman, the Board of Directors will conduct regular self-assessments to determine whether it and its committees are functioning effectively. The evaluation will have the following objectives: • Evaluating how well the Board operates; • Checking that important issues are adequately discussed and prepared; • Evaluating the content of each Director's contributions, his or her presence at Board and Committee meetings and the constructive nature of his or her involvement in discussions and decisions; • Checking the actual composition of the Board against the desired composition; with the non-executive Directors regularly evaluating their interaction with the Executive Management.

At regular intervals the way each director has exercised his or her duties, as well as his or her role and responsibilities, will be reviewed with a view to adapting the composition of the Board to reflect intervening changes. Specific attention will be given to the evaluation of the Chairman of the Board of Directors and the Chairmen of the Committees. When a director's term of office comes

/ 43

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

up for renewal, that director's involvement and effectiveness will be evaluated using a transparent and pre-established procedure. The Chairman of the Board will receive comments from all Directors and will report to the Board of Directors. This report will include an assessment of the Board's performance. The evaluation will focus on the Board's contribution to the company Zetes Industries SA/NV, and specifically on those areas in which the Board considers that there is room for improvement.

The Board will react to the results of performance analysis by recognizing its strengths and correcting weaknesses. When required, this will involve the appointment of new members, the non-reappointment of existing members or the taking of any action that seems appropriate for the effective functioning of the Board of Directors.

The Board will ensure that measures are taken for the orderly reappointment of Board members. It will ensure that any new appointment and any renewal, of both executive and non-executive Directors, will maintain an appropriate balance of required skills within the Board of Directors.

3. Internal control and risk management as regards the preparation of financial information Internal control relevant to the preparation of financial reporting is a structural component of the company, defined and implemented under its responsibility, which seeks to ensure the reliability of financial information and the compliance of the financial statements with IFRS (International Financial Reporting Standards).

The Board of Directors is responsible for defining the measures necessary to ensure the integrity and timely publication of the financial statements and of other significant financial information provided to shareholders.

The Executive Management is responsible for establishing and monitoring internal controls based on the reference framework approved by the Board of Directors as well as for preparing the financial statements and other significant financial information of the company.

Internal control of financial information includes more specifically rules and procedures that: • relate to the detailed recording of transactions involving company assets; • provide reasonable assurance that transactions are recorded in such a way as to permit preparation of financial statements in conformity with IFRS; • provide reasonable assurance that the company's sales are made in accordance with the conditions imposed by the Executive Management and Board of Directors of the company, and that the expenditures of the company are incurred with their authorization; • provide reasonable assurance regarding the prevention or timely detection of any unauthorized acquisition, use, or transfer of assets that could have a material effect on the consolidated financial statements.

The Executive Management is responsible for the exercise of internal control over financial reporting. This control includes the evaluation of significant risks, identifying malfunctioning, shortcomings and difficulties of implementation, and monitoring of measures taken to correct deficiencies identified.

Given its limitations, internal control of financial information may be unable to prevent or detect false declarations. In addition, it is difficult to anticipate how effective such control will be in future periods: controls could potentially become inadequate because of changing conditions or because they fail to keep pace with evolving policies or procedures.

The Executive Management has evaluated the effectiveness of the internal control of financial reporting as of 31 December 2014.

This evaluation focused on the design of the internal control of financial information and included tests of its operating efficiency.

On this basis, the Executive Management was of the opinion that, as of 31 December 2014, the Company had adequate internal control of financial information.

4. Managing Directors and Executive Management The Board of Directors has appointed the managing directors of Zetes Industries SA/NV. The Board of Directors has granted authority to the managing directors to enable them to fulfil their responsibilities and duties. They will have sufficient room to propose and implement, within the legal framework, a corporate strategy that reflects the company's values, risk appetite and key policies. To this end, the Chief Executive Officer (CEO) (Alain Wirtz SA) and the Chairman of the Board (Jean-François Jacques SPRL) are both managing directors of Zetes Industries SA/NV. The managing directors work together with the Executive Management, which consists of all the executive directors of Zetes Industries SA, i.e. currently the two managing directors and the CFO. The Executive Management is therefore composed of three members: the two managing directors, Alain Wirtz SA and Jean-François Jacques SPRL, and the CFO of the company, Mr Pierre Lambert. The Executive Management does not constitute a management committee (comité de direction) within the meaning of article 524bis of the Belgian Companies Code.

5. Committees of the Board of Directors 5.1 Role A substantial portion of the preparatory analysis and work of the Board of Directors is done by standing Board Committees.

The decision-making, however, remains within the collegial responsibility of the Board of Directors, with the Committees only having an advisory function (but not excluding the possibility of ad hoc delegations). They assist the Board of Directors in specific areas, which they cover in appropriate detail and upon which they make recommendations to the Board of Directors. The Board of Directors will have at all times an Audit Committee and a Remuneration Committee. The Board of Directors may, from time to time, establish or maintain additional Committees as necessary or appropriate.

5.2 Composition and appointment Committee members shall be appointed by the Board of Directors.

The Chairman of the Board of Directors shall ensure that the Board of Directors appoints Committee members and a Chairman

/ 44

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

for each of these Committees. Each Committee is composed of at least three members. Appointment shall not be for a term exceeding that of Board membership. In deciding on the specific composition of a Committee, consideration shall be given to the needs and qualifications required for the optimal functioning of that Committee. The designation of Committee members is based on (i) their specific competences and experience, in addition to the general competence requirements for Board members, and (ii) the requirement that each Committee, as a group, possesses the competences and experience needed to perform its tasks.

5.3 Audit Committee The Audit Committee assists the Board of Directors in its oversight of (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the external auditor’s qualifications and independence, and (iv) the performance of the Company’ internal controls and risk management and its external auditors' accomplishment of their mission.

The responsibilities of the Audit Committee are described in detail in the Corporate Governance Charter.

The Audit Committee is composed exclusively of non-executive Directors. At least one of them is an independent director. At 31 December 2014, the members of the Audit Committee were: • Gema SPRL, represented by Mr Michel Allé (Chairman of the Audit Committee, independent director) • Mr Hiram Claus (non-executive director), • Floris Vansina BVBA, represented by Mr Floris Vansina (nonexecutive director) • Mr Paul Jacques (independent director)

5.4 Remuneration Committee The role of the Remuneration Committee is to assist the Board of Directors in all matters relating to the remuneration of Board members (executive and non-executive) and of those Zetes Industries SA/NV employees that report directly to the Executive Management, and in those matters regarding the governance of the group on which the Board of Directors or the Chairman of the Board of Directors wishes to receive the Committee’s advice.

The responsibilities of the Remuneration Committee are described in detail in the Corporate Governance Charter.

The Remuneration Committee should consist of no less than three Directors. All members should be non-executive Directors. The majority of Committee members should be Independent Directors. At 31 December 2014, the members of the Remuneration Committee were: • Jean-Marie Laurent-Josi (Chairman of the Remuneration Committee, non-executive director) • Paul Jacques (independent director) • José-Charles Zurstrassen (independent director)

6. Report on the remuneration of Directors and the Executive Management ZETES INDUSTRIES SA/NV - Remuneration Report 2014 6.1 General Principles of the Remuneration Policy This section describes the general principles of Zetes Industries' remuneration policy.

The aim of the remuneration policy within the Zetes Group is to reward individual and collective performance, to align the interests of the senior managers, directors and shareholders of Zetes Industries, while taking due account of the differences between the Group's operating companies. This policy has been applied consistently for many years.

With respect for good corporate governance, compensation is consistent with the standards for the industry, and a bonus system, directed at the performance and the values of the Company, exists to motivate the Zetes Industries executive management and the managers of the Group to work towards the lasting growth of the value of the Company.

The remuneration guidelines and the bonus systems of the Zetes Group seek to ensure the Executive Management of Zetes Industries and to Group executives of appropriate remuneration for their activities and their levels of responsibility, taking into account the economic situation and the success and the prospects of the Zetes Group.

In this way the total remuneration package of executive directors of Zetes Industries as well as heads of the operational and functional units consists is made up as follows: 1. fixed components independent of the results, 2. bonuses dependent on both the results for one financial year and the respect of quality criteria directly related to an alignment between the long-term strategy of the Company and the interests of its shareholders These general principles already applied in 2013 and continued to do so in 2014.

/ 45

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

6.2 With regard to the market conformity of remuneration

6.3.3 Remuneration structure

In order to assess objectively the remuneration of the Executive Management, the Remuneration Committee has ad hoc studies enabling it to position said remuneration.

In 2014, members of the Executive Management received remuneration consisting of a fixed salary and variable compensation dependent on both Zetes Group's consolidated financial results and the respect of qualitative targets including a concept of long-term growth in the enterprise value.

The surveys assess the amount and the structuring of compensation. This has allowed the Remuneration Committee to ensure that the remuneration of Executive Mangement is in line with that practised by publicly traded Belgian and European companies of similar structure, size and activity.

6.3. Remuneration of the executive directors: This section describes the remuneration programme for executive directors. It contains a description of the structure of their remuneration and also clarifies the relationship between performance and pay levels.

6.3.1 Principles The contractual arrangements and remuneration of members of the Executive Management are adopted and audited annually by the Remuneration Committee appointed by the Board. With respect to variable remuneration, the Remuneration Committee sets the objectives of the Executive Management and assesses how far these have been fulfilled.

The criteria taken into account in determining variable compensation are: –– The achievement of the budget objectives of the reference year as adopted by the Board at the end of the previous year; –– The reactivity and adaptability of Executive Management to economic changes during the reference year; –– The ability to propose external growth operations and to integrate them successfully into the Group.

Moreover, taking into consideration the constant readiness demonstrated by the Executive Management of Zetes Industries over the last twenty years to manage the business in a long-term perspective, the Compensation Committee intends to propose to the General Assembly that it waives, by specific approval, the prescriptions of Article 520ter of the Companies Act.

6.3.4 Summary of the total compensation paid in 2014 2014

6.3.2 Beneficiaries The Executive Management of the Company is composed of the following companies and persons: Alain Wirtz SA

CEO and Managing Director

represented by Mr Alain Wirtz

Jean-François Jacques SPRL represented by Mr Jean-François

Chairman of the Board and Managing Director

Fixed remuneration

305,000 €

Variable remuneration

300,000 €

Total

605,000 €

Remuneration of the other members of the Executive Management 2014

Jacques

Mr Pierre Lambert

Chief Financial Officer and Director

Fixed remuneration

476,190 €

Variable remuneration

440,000 €

Total

916,190 €

6.3.5 Stock Options and shares Members of the Executive Management took part in the employee share plan introduced in the first half of 2014. Each of them subscribed 2.500 shares at € 16.43, the subscription price being determined based on the average closing price of the share for the 30 days preceding the offer. A discount of 16.67 was applied to the average price, in return for which the shares are blocked for a two-year period.

There is no remuneration in the form of Stock Options either for the CEO or for the other members of Executive Management.

6.3.6 Pension plan No pension plan is established for the companies Alain Wirtz SA and Jean-Francois Jacques SPRL. Mr Pierre Lambert, in his capacity as Chief Financial Officer and director of Zetes Industries SA, works under the selfemployed mandated agent regime. He enjoys an individual pension commitment, the amount of which is included in his fixed remuneration. (*) e.a."Executive remuneration in Belgium 2013", E&Y

/ 46

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

6.3.7 Severance indemnities In the event of the revocation of their appointments, other than dismissal for serious offence, Alain Wirtz SA and Jean-François Jacques SPRL will each receive an indemnity equal to twelve months' compensation (annual base salary and variable pay); that of Mr Lambert, as a self-employed mandatary, will be equivalent to eighteen months.

In the event that Alain Wirtz SA and/or Jean-François Jacques SPRL resign from their directorships, they undertake to provide, at the request of the Board, various support, consultancy and transfer of know-how activities on an exclusive basis for a period of twelve months on the same financial terms (annual base salary and variable pay). Mr Lambert’s undertaking is for nine months.

There is no provision for any special severance payment in case of takeover ('golden parachutes').

6.3.8 Right of recovery of variable remuneration Other than as provided by law, there is no specific contractual provision concerning the recovery of the variable remuneration attributed on the basis of incorrect financial information.

6.4. Remuneration of non-executive directors and members of Board committees The non-executive directors of the Company receive for their Services a) a fixed annual amount, decided by the General Meeting of Shareholders and set at € 6.000 and b) an amount of € 500 for each attendance at a Board of Directors meeting.

The non-executive members of the Audit Committee receive an amount of € 1.250 for each meeting of the Audit Committee in which they participate.

The Company does not provide non-executive directors with any remuneration, benefits or other incentives, other than remuneration, for their services as directors of the company.

Non-executive directors do not receive any variable remuneration linked to results or other performance criteria. They are not entitled to stock options, or to any extra-legal pension scheme.

At 31 December 2014, the remuneration of non-executive directors broke down as follows:

Board of Directors

Audit Committee

Total

Jean-Marie Laurent Josi (*)

8,000 €

Floris Vansina BVBA

9,000 €

3,750 €

12,750 €

Paul Jacques

9,000 €

3,750 €

12,750 €

José-Charles Zurstrassen

7,500 €

Olivier Gernay

8,000 €

Gema Sprl

9,000 €

Hiram Claus (*) Total

8,000 €

7,500 € 8,000 € 3,750 €

12,750 €

8,500 €

3,750 €

12,250 €

59,000 €

15,000 €

74,000 €

(*) Messrs. Jean-Marie Laurent Josi and Hiram Claus surrender their directors' fees in favour of SA Cobepa.

7. Capital structure The capital of the Company is represented by 5.389.714 shares.

At 31 December 2014, Zetes Industries SA/NV held 266.936 own shares, leaving 5.122.778 shares in circulation at the same date.

In 2005, the Board of Directors issued 191.894 warrants for the benefit of its employees, directors or persons having management assignments at Zetes Industries SA/ NV subsidiaries. Each warrant was granted free of charge and entitled its holder to one share, exercisable at € 23 per share. Under the conditions of the share option plans, these warrants became exercisable from June 2009. At 31 December 2014, 166.071 warrants remained in circulation.

In 2007, the Board of Directors also issued 23.800 warrants for the benefit of its employees, directors or persons having management assignments at Zetes Industries SA/NV subsidiaries. Each warrant was granted free of charge and entitled its holder to one share, exercisable at € 22.63 per share. At 31 December 2014, 2.800 warrants remained in circulation.

/ 47

FINANCIAL INFORMATION AND CORPORATE GOVERNANCE

7.1.Shareholding structure

7.2. Notification Art. 74 of the Law of 1 April 2007

Based on the notifications received and published up till 31 December 2014, the shareholding structure is as follows:

According to article 74 of the Law of 1 April 2007 on takeover bids, Zetes Industries SA/NV has received notifications from the following shareholders. These notifications include all legally required statements and mention in particular that, acting in concert with other people since 21 November 2005, these shareholders held more than 30% of the voting securities issued by the company:

Without exercise of the warrants Shareholder Zephir (in concert with Cobepa) Cobepa (in concert with Zephir) Ratio Capital Management BV Axa Belgium Other registered shareholders Employees Public Own shares TOTAL

number of shares % 1,277 495 23.70% 1,329 655 24.67% 210,000 3.90% 199,453 3.70% 8,041 0.15% 38,550 0.72% 2,059 584 38.21% 266,936 4.95% 5,389 714 100%

After exercise of the warrants and delivery of the existing 168.871 own shares.

Shareholder Zephir (in concert with Cobepa) Cobepa (in concert with Zephir) Ratio Capital Management BV Axa Belgium Other registered shareholders Employees Public Own shares TOTAL

number of shares 1,277 495 1,329 655 210,000 199,453 8,041 38,550 2,228 455 98,065 5,389 714

% 23.70% 24.67% 3.90% 3.70% 0.15% 0.72% 41.35% 1.82% 100%

Pursuant to the decision of the Board of Directors of 28 May 2014, the Board of Directors decided, on 18 March 2015, to allot own shares in the event of exercise of the options.

Except for the above mentioned information, as at 31 December 2014 the Company has not received any other notification of any ownership of shares of more than 3% in compliance with the articles of association.

a) Zephir Corporation SA, a corporation organised under the laws of Belgium acting in concert with Copeba SA. b) Copeba SA, a corporation organised under the laws of Belgium acting in concert with Zephir Corporation SA. Under the terms of their agreement, Zephir Corporation and Cobepa have agreed (among other matters) the following: a) Minimum number of directors - each party will vote in favour of a minimum number of candidates for directorships proposed by the other in accordance with the following rule: one candidate for every complete 7% of all the issued and outstanding shares of the Company held by Zephir Corporation or Cobepa. b) Pre-emption right: the parties have a pre-emption right on the shares the other party wishes to transfer according to defined rules. However, 25% of the shareholdings owned by both parties immediately after the IPO are free of this pre-emption right.

7.3. Measures to prevent insider trading The Zetes Group’s code of conduct to prevent insider trading is included in the Corporate Governance Charter. This is published on the website (www.zetes.com/en/investor-relations/corporategovernance).

8. Policy for the appropriation of the results The intention of the Company is to pay out dividends for an amount of about one third of its net profit before goodwill impairment. Any proposal to pay dividends will also be based upon the Company’s financial situation, its capital requirements and other factors considered important by the Company.

In accordance with this policy, the Board of Directors will propose to the General Shareholders’ Meeting on 27 May 2015 that it declare a gross ordinary dividend per share of € 0.63, up 14.5% on the previous year’s amount.

Publication Zetes Corporate Marketing & Communication Executive Editor Pierre Lambert, CFO Da Vinci Science Park Rue de Strasbourg 3 B-1130 Brussels Design www.chocoweb.be Layout and production www.visible.be This report was written in French. The Dutch and English versions are provided for the convenience of the reader. Only the French version is legally binding.

www.zetes.com/RA2014