Zenitel : PR Zenitel Results 2019 EN

Press Release

Regulated information - Inside information

14 February 2020, 8:00 AM

Zenitel reports solid growth for 2019

Zenitel N.V. (EURONEXT Brussels: ZENT), a leading player in instant and secure audio and data communication, today announced its results for the fiscal year ended 31 December 2019.

• Total revenue amounted to 76.3 million euro compared to 61.8 million euro in 2018. This represents a growth of 23.3%.
• EBITDA amounted to 6.5 million euro, an increase of 2.3 million euro of which 1.8 million euro as a result of the adoption of IFRS 16.
• EBIT amounted to 3.9 million euro, compared to 3.2 million euro in 2018.
• Net profit from operations was 3.0 million euro, compared to 2.7 million euro in 2018.
• Financial cash position of 21.3 million euro at the end of 2019, compared to 20.4 million euro in 2018.

Koen Claerbout, CEO of Zenitel, commented:

"Thanks to both the organic growth and the acquisition of the Phontech activities, we are pleased to announce that the top line has increased by 23.3%. The revenue strongly grew in all geographical regions in both the maritime and energy markets as well as in the onshore safety and security market.

In 2019 we continued to invest in new product development, business development and in the strengthening of our organization. Additional talent in the field of management, R&D and M&S has joined our global Zenitel team. EBIT and Net profit have increased compared to 2018. In 2020 we will further strengthen our market position by investing in new product development and business development activities."

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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Consolidated key figures:

CONSOLIDATED KEY FIGURES

	(thousands of euro)	2019	2018	2017	2016	2015
	FROM CONSOLIDATED STATEMENT OF PROFIT OR LOSS
	Revenue		76 257	61 831	59 915	63 473	66 498
	Profit before tax		3 765	3 383	3 068	2 617	2 295
	Profit of the year		3 022	2 653	2 265	2 561	7 329
	FROM STATEMENT OF FINANCIAL POSITION
	Total assets (*)		59 114	50 138	44 763	47 494	54 652
	Shareholders' equity		32 578	29 327	26 730	26 718	27 889
	Working capital		7 781	5 967	2 474	1 535	2 475
	Total financial debt (2) (*)		5 612	2 120	1 606	2 511	1 889
	Total provisions (3)		4 807	4 789	5 514	5 215	4 081
	Cash and cash equivalents		21 331	20 371	18 950	19 249	17 551
	ALTERNATIVE PERFORMANCE MEASURES
	EBITDA (1) (*) (**)		6 509	4 240	5 223	4 313	4 033
	Operating profit (EBIT)		3 923	3 164	3 557	2 483	2 649
	Net result continuing operations		3 022	2 653	2 265	2 561	2 200
	RATIOS
	Shareholder's equity ratio (*)		55.1%	58.5%	59.7%	56.3%	51.0%
	Net debt (4) / EBITDA (*)(**)		-2.4	-4.3	-3.3	-3.9	-3.9
	Net debt (4) and provisions (3) / EBITDA (*)(**)		-1.7	-3.2	-2.3	-2.7	-2.9
	Weighted average number of shares (in thousands)		3 308	3 311	3 305	3 306	3 311
	Shareholder's equity/share (EUR)		9.85	8.86	8.09	8.08	8.42
	Earnings/share (EUR)		0.91	0.80	0.69	0.77	2.21
	ROCE(5) (*)		24.8%	30.5%	43.0%	30.9%	25.8%
	OTHER KEY FIGURES
	FTE (***)		303	300	264	266	283

1. EBITDA: earnings before interest & taxes, depreciation and amortization
2. Total financial debt: long term and short term interest bearing loans and borrowings
3. Total provisions: Retirement benefit obligations plus provisions (both current and non current)
4. Net debt: Total debt minus cash and cash equivalents
5. ROCE: EBIT / (tangible assets + intangible assets + working capital)

1. Impacted due to the adoption of IFRS 16

1. As of 2019 impairment on current assets are included in raw materials and consumables used which has an impact on EBITDA (***) The reported Group FTE's include both employees and contractors

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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Discussion of the consolidated key figures:

Revenue in 2019 was 76.3 million euro compared to 61.8 million euro in 2018. The revenue increase is mainly due to organic growth and the Phontech acquisition of last year.

EBITDA in 2019 ended at 6.5 million euro, 2.3 million euro higher than last year of which 1.8 million euro came from the adoption of IFRS 16.

The operating profit (EBIT) amounted to 3.9 million euro compared to 3.2 million euro in 2018.

The net financial expenses amounted to 0.2 million euro compared to 0.2 million euro net financial income in 2018. In 2018 a gain on bargain purchase of 0.4 million euro was booked in the line finance income as a result of the Phontech acquisition.

The total consolidated net result from continuing operations for the Zenitel Group shows a profit of 3.0 million euro compared to 2.7 million euro in 2018.

Earnings per share amounted to 0.91 euro in 2019 against EUR 0.80 in 2018.

Total provisions amounted to 4.8 million euro and are in line with last year.

At the end of 2019 total assets amounted to 59.1 million euro against 50.1 million euro at year end 2018. An increase in total assets of 9.0 million euro of which 3.3 million euro is due to the adoption of IFRS 16.

Shareholders' equity increased from 29.3 million euro to 32.6 million euro in 2019 which is mainly as a result of the profit of the year. Equity ratio was 55.1% in 2019 compared to 58.5% in 2018 mainly due to the adoption of IFRS 16.

Net cash flow of the Zenitel Group amounted to 0.8 million euro in 2019 compared to 1.5 million euro in 2018. The outflow from investment activities amounted to 1.0 million euro in 2019 and the cash flow generated from operations before changes in working capital amounted to 8.1 million euro in 2019 compared to 4.4 million euro last year. At the end of 2019, Zenitel's cash and cash equivalents amounted to 21.3 million euro.

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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Appendices to this press release:

The following detailed information is included in the annexes to this press release:

• Annex 1: Consolidated statement of profit or loss of the Zenitel group for the year ended 31 December 2019
• Annex 2: Consolidated statement of profit or loss and other comprehensive income of the Zenitel group for the year ended 31 December 2019
• Annex 3: Consolidated statement of financial position of the Zenitel group as at 31 December 2019
• Annex 4: Consolidated statement of changes in equity of the Zenitel group for the year ended 31 December 2019
• Annex 5: Consolidated statement of cash flows of the Zenitel group for the year ended 31 December 2019

Outlook 2020:

Zenitel will further strengthen its market position in the global security market by building on the technology leadership in superior audio communication products enabling seamless integration in security solutions.

For the onshore safety and security business, business growth is expected based on new product development and the strengthened global partner network. The Zenitel solutions realize superior audio communication integrated in security platforms with technologies such as access control, video surveillance and fire alarm. The R&D activities combined with the increased market reach are the basis for further growth in this market.

In the maritime and energy market, Zenitel will further grow the business based on the integration of activities realizing unique and high performing communication solutions for our customers worldwide.

Declaration of the auditor:

The statutory auditor of Zenitel NV, EY Bedrijfsrevisoren BV, represented by Marnix Van Dooren, has confirmed that the audit work, which is substantially complete, has not revealed any significant matters requiring adjustments of the 2019 consolidated financial information included in this press release.

Financial Calendar:

27/03/2020 Publication Annual Report (8:00 AM)

28/04/2020 Annual General Shareholders' Meeting (11:00 AM)

12/08/2020 Press Release Half-Year Results 2020 (8:00 AM)

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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Disclaimer:

This press release may contain forward-looking statements. Such statements reflect the current views of Management and the Board of Directors regarding future events and involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Zenitel is providing the information in this press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release in light of new information, future events or otherwise. Zenitel disclaims any liability for statements made or published by third parties and does not undertake any obligation to correct inaccurate data, information, conclusions or opinions published by third parties in relation to this or any other press release issued by Zenitel.

Contact Zenitel:

For further information, please contact:

Mr. Koen Claerbout, CEO (*): [phone]

Mr. Mark Küpers, CFO: [phone]

Mr. Johan Meersman, Corporate Finance & Compliance (*): [phone]

Zenitel has firmly established itself at the intersection of two domains - communication on the one hand, security and safety on the other. As a leading player in instant audio and data communication, Zenitel is the preferred choice in situations that involve the protection of human lives, or the management of critical activities. Zenitel is committed to the success and future objectives of its Secure Communication Systems (SCS) activity that develops and distributes fully integrated communication platforms including Intercom, Public Address and two-way Radio Systems.

Zenitel has a strong presence in both the onshore and offshore secure communications market through its global brands, Vingtor-Stentofon and Phontech. These brands are recognized globally for offering advanced offshore and onshore communication systems. Vingtor-Stentofonand Phontech provide integrated security communications for environments where life, property and assets are at stake. Systems interface with other security devices including CCTV, access control and alarm for a comprehensive security solution. Vingtor-Stentofon'sprimary system offering is within Public Address, Intercom and Radio. The key markets include Building Security & Public Safety, Transportation, Industrial, Energy and Maritime.

Zenitel is a listed company (Euronext). The statutory headquarter of Zenitel is in Zellik (Brussels) and the operational headquarters is based in Norway.

(*) Representing a BVBA

For more information: www.zenitel.com

The enclosed information constitutes regulated information as defined in the Royal Decree of 14 November 2007 regarding the duties of issuers of financial instruments, which have been admitted for trading on a regulated market.

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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Annex 1: Consolidated statement of profit or loss of the Zenitel group for the year ended 31 December 2019

	Year ended 31 December
(thousands of euro)	2019	2018
Continuing operations
Revenue	76 257	61 831
Raw materials and consumables used(**)	-35 160	-26 728
Employee benefits expenses	-27 516	-21 566
Depreciation and amortization expenses (*)	-2 586	-1 076
Consulting expenses	-1 809	-1 930
Facility expenses (*)	-2 894	-4 143
Other expenses (*)	-2 369	-3 224
Total operating expenses	-72 334	-58 667
Operating Profit / (Loss)	3 923	3 164
Finance income	145	413
Finance costs	-443	-337
Net foreign exchange gains / (losses)	140	143
Profit before tax	3 765	3 383
Income tax income/ (expenses)	-743	-730
Profit for the year	3 022	2 653
Earnings per share
Weighted average number of ordinary shares in issue ('000)	3 308	3 311
From continuing operations
Basic earnings per share	0.91	0.80
Diluted earnings per share	0.91	0.80

(*) Impacted due to the adoption of IFRS 16

(**) As of 2019 impairment on current assets are included in raw materials and consumables used.

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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Annex 2: Consolidated statement of profit or loss and other comprehensive income of the Zenitel group for the year ended 31 December 2019

(thousands of euro)	Year ended 31 December
	2019	2018
Profit for the year	3 022	2 653
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign operations *	309	-134
Items that will not be reclassified subsequently to profit or loss:
OCI actuarial gains & losses	-43	13
Other comprehensive income for the period (net of income tax)	266	-121
Total comprehensive income for the period	3 288	2 532
Attributable to:
Owners of the Company	3 288	2 532
Non-controlling interests	-	-

1. In 2019 and 2018, the positive/negative exchange differences in the other comprehensive income line were mainly booked on foreign operations held in Norwegian Krone, US Dollar and Singaporean Dollar.

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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Annex 3: Consolidated statement of financial position of the Zenitel group as at 31 December 2019

(thousands of euro)	Year ended 31 December
	2019	2018
ASSETS
Non-current assets
Property, plant and equipment (*)	4 593	806
Goodwill	3 272	3 246
Other intangible assets	195	360
Deferred tax assets	1 173	822
Financial assets	240	238
Total non-current assets	9 474	5 472
Current assets
Inventories	12 648	10 705
Contracts in progress	-	83
Trade and other receivables	14 374	12 016
Deferred charges and accrued income	1 287	1 491
Cash and cash equivalents	21 331	20 371
Total current assets	49 640	44 666
TOTAL ASSETS	59 114	50 138

(*) Including Right-of-use assets due to adoption of IFRS16

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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(thousands of euro)	Year ended 31 December
	2019	2018
EQUITY AND LIABILITIES
Capital and reserves
Capital	20 000	20 000
Share premium account	5 340	5 340
Reserves	-342	-651
Retained earnings	7 617	4 638
Treasury shares	-37	-
Equity attributable to owners of the Company	32 578	29 327
Total equity	32 578	29 327
Non-current liabilities
Borrowings and lease liabilities (*)	1 934	61
Retirement benefit obligations	418	357
Deferred tax liabilities	-	28
Total non-current liabilities	2 352	446
Current liabilities
Trade and other payables	15 091	13 874
Borrowings and lease liabilities (*)	3 678	2 059
Current tax liabilities	1 026	-
Provisions	4 389	4 432
Total current liabilities	24 184	20 365
TOTAL EQUITY AND LIABILITIES	59 114	50 138

(*) Including lease liabilities due to adoption of IFRS16

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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Annex 4: Consolidated statement of changes in equity of the Zenitel group for the year ended 31 December 2019

				Foreign
				currency		Attributable
	Share	Share	Treasury	translation	Retained	to owners of
(thousands of euro)	capital	premium	shares	reserve	Earnings	the parent	Total

Balance at 1 January 2018

Profit for the year

OCI actuarial gain and losses

Other comprehensive income for the year, net of income tax

Total comprehensive income for the year

Acquisition/sale of treasury shares

Balance at 31 December 2018

Balance at 1 January 2019

Profit for the year

OCI actuarial gains & losses

Other comprehensive income for the year, net of income tax

Total comprehensive income for the year

Acquisition/sale of treasury shares

Balance at 31 December 2019

20 000	5 340	-65	-517	1 972	26 730	26 730
				2 653	2 653
				2 653
				13	13	13
			-134		-134	-134
			-134	2 666	2 532	2 532
		65			65	65
20 000	5 340	0	-651	4 638	29 327	29 327
20 000	5 340	0	-651	4 638	29 327	29 327
				3 022	3 022	3 022
				-43	-43	-43
			309		309	309
			309	2 979	3 288	3 288
		-37			-37	-37
20 000	5 340	-37	-342	7 617	32 578	32 578

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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Annex 5: Consolidated statement of cash flows of the Zenitel group for the year ended 31 December 2019

(thousands of euro)	Year ended 31 December
	2019	2018
Cash flows from operating activities
Net profit / (Loss) for the year	3 022	2 653
Income tax expense recognized in profit or loss	743	730
Finance cost recognized in profit or loss	443	337
Finance income recognized in profit or loss	-145	-413
Impairment on trade receivables	84	-101
Impairment on inventory	1 401	128
Depreciation and amortization of non-current assets (*)	2 586	1 076
Cash generated from operating activities before changes in
working capital	8 134	4 410
Changes in working capital	-4 255	-1 268
Interest paid	-291	-238
Income taxes paid	-54	-177
Net cash generated from operating activities	3 535	2 728
Cash flows from investing activities
Interest received	18	18
Proceeds received from minority interest	121	-
Net cash outflow on acquisitions of subsidiaries	-	-1 275
Payments for property, plant and equipment	-1 036	-314
Proceeds from disposal of intangible assets	2	1
Payments for intangible assets	-120	-179
Net cash (used in) / generated by investing activities	-1 015	-1 749
Cash flows from financing activities
Acquisition/Sale of treasury shares	-37	65
Movement in used factoring facility	212	512
Repayment of borrowings and lease liabilities (*)	-1 870	-19
Net cash received / (used) in financing activities	-1 695	558
Net (decrease)/increase in cash and cash equivalents	823	1 535
Movement in cash and cash equivalents
At start of the year	20 371	18 950
Increase / (decrease)	823	1 535
Effect of exchange rate changes of cash held in foreign currencies	137	-114
At the end of the year	21 331	20 371
Total Cash and cash equivalents	21 331	20 371
Net cash and cash equivalents at the end of the year	21 331	20 371

(*) Impacted due to the adoption of IFRS 16

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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Restatement due to IFRS

General

IFRS 16 Leases (effective 1 January 2019) sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on balance-sheet model. It replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases incentives and SIC 27 Evaluating Substance of Transactions involving the Legal Form of a Lease. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are optional exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard.

Transition to IFRS 16

The Group applied in 2019 the adoption of IFRS16 on its consolidated financial statements. As a result of this adoption, the group determined following operating lease contracts that are in scope of IFRS 16: (i) office and site premises, (ii) cars and (i) IT equipment.

.

The Group adopted IFRS 16 using the modified retrospective transition method.

The Group elected to apply the standard to contracts that were previously identified as leases applying IAS 17 and IFRIC 4. The Group elected to use the exemptions proposed by the standard on lease contracts for which the lease terms ends within 12 months as of the date of initial application, and lease contracts for which the underlying asset is of low value.

The most important judgements and assumptions in determining the lease asset and liability are:

• use of the practical expedients. e.g. use of a single discount rate per group of contracts, summarized per their duration. Those leases were assumed to have similar characteristics. No hindsight was used. The Group did not reassess if a contract is, or contains, a lease at the date of initial application.
• The Group assessed the non-cancellable period of each of the contracts in scope of IFRS 16. This includes the period covered by an option to extend the lease, if the lessee is reasonably certain to exercise that option.

In summary the impact of IFRS 16 adoption as at 1 January 2019 is as follows:

	Impact of IFRS 16
(thousands of Euro)	on 1 January 2019
Property, plant and equipment (right-of-use assets)	3 941
Lease Liability	3 941

As the Group's assets are equal to the liabilities at the date of transition, there is no impact on the Group's equity or profit or loss statement (including deferred taxes). The Group presents right-of-use assets in a separate line item within "property, plant and equipment" and lease liabilities within "Borrowings and lease liabilities" in the statement of financial position.

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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The following is an analysis of the impact of the adoption of IFRS 16 as at 1 January 2019 and the existing off-balance lease obligation as of 31 December 2018:

(thousands of Euro)	Reconciliation IAS 17 to IFRS 16
Minimum lease payments under operating leases IAS 17 as of 31 December 2018	4 033
Effect from discounting at the incremental borrowing rate	-583
Effect from lease term assumptions as of 1 January 2019	491
Lease liabilities under IFRS 16 as of 1 January 2019	3 941

Accounting policies

Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period in exchange for consideration.

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. Assets and liabilities arising from a lease are initially measured on a present value basis, discounted using the Group's best estimation for the weighted average incremental borrowing rate. The right-of- use asset is subsequently depreciated and/or impaired when deemed necessary. The right-of-use asset is also adjusted for certain re-measurements of the lease liability.

The lease liability is subsequently increased by the interest cost on the lease liability and reduced by lease payment made. It is re-measured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable, or a change in the reassessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option curtained not to be exercised.

The Group has applied judgement to determine the lease term for lease contracts containing renewal options.

Impact for the period

As a result of the application of IFRS 16, the Group recognized EUR 3.3 million of right-of-use assets and EUR 3.3 million of lease liabilities as at 31 December 2019.

Due to the adoption of IFRS 16, an amount of EUR 1.8 million that was previously classified as OPEX expenses (booked in facility- and other expenses) is now presented as depreciations (EUR 1.8 million) and interest expense (EUR 0.05 million). This is due to the change in the accounting for expenses of leases that were classified as operating leases under IAS 17.

The recognized right-of-use assets relate to the following types of assets:

RoU assets
	RoU	RoU
	31	1
	December	January
(thousands of Euro)	2019	2019
Rent of buildings/offices	2 539	3 254
Cars	546	397
IT equipment	186	290
Total	3 271	3 941

The expenses of short-term lease contracts and low value contracts are considered immaterial.

Zenitel NV Z.1. Research Park 110 Zellik, Belgium Tel. : + 32 2 895 22 22, fax : + 32 2 370 51 19 www.zenitel.com

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