prospectus of the public offering to subscribe to

PROSPECTUS OF THE PUBLIC OFFERING TO SUBSCRIBE TO 16,554,422 NEW SHARES IN THE CONTEXT OF A CAPITAL INCREASE IN CASH

WITH NON-STATUTORY PREFERENTIAL SUBSCRIPTION RIGHTS IN THE FRAMEWORK OF THE AUTHORISED CAPITAL, OF AN AMOUNT OF

€13,243,538

REQUEST FOR ADMISSION TO TRADING ON EURONEXT BRUSSELS OF THE NEW SHARES

Zenitel SA/NV (the "Issuer") is offering new ordinary shares, without nominal value (the "New Shares") for an amount of €13,243,538 to be issued pursuant to a capital

increase with a non-statutory preferential right to the Existing Shareholders ("Non-Statutory Preferential Subscription Rights"). The offering (the "Offering") consists of a

public offer in Belgium to the Existing Shareholders of the Issuer to whom the entire issue of New Shares is available by way of Non-Statutory Preferential Subscription

Rights to be exercised within five-Business Days pro rata their current participation in the Issuer, in accordance with section 5.9 "Procedure for exercise of Non-Statutory

Preferential Subscription Rights".

The capital increase resulting from the subscription to the New Shares will be resolved upon by the board of directors in the context of the authorised capital, in accordance

with the authorisation granted by the extraordinary general shareholders’ meeting on 28 April 2014 (see also section 5.1 "Decision of the Issuer"). The preferential

subscription rights of the Existing Shareholders have been cancelled in accordance with article 596 BCC. The board of directors has issued a special report in this respect

justifying the issue price and the financial consequences for those Existing Shareholders. This special report is available on the website of the Issuer (www.zenitel.com).

Subscription to the New Shares is reserved to Existing Shareholders at the conditions defined in the Prospectus, in particular:

- Issue Price: € 0.80

- Subscription ratio: 1 New Share per 1 existing share

- Number of New Shares: 16,554,422

- Subscription Period: from 13 June 2014 (8.00) until 19 June 2014 (16.00),

inclusive

- Payment Date for the New Shares: 24 June 2014

- The New Shares will be issued with the same rights attached to the existing

shares of the Issuer (see section 7.2 "Rights attached to the shares"). All shares

participate in equal amounts in the profit of the Issuer (if any). The New Shares

will participate in the results of the entire financial year that begins on 1 January

2014 and every subsequent financial year

- Like the existing shares, the New Shares shall bear ISIN code BE0003806230

and shall have as symbol "ZENT"

All New Shares not subscribed by Existing Shareholders through their Non-Statutory Preferential Subscription Rights will be subscribed by 3D NV, which has

unconditionally committed itself (i) to subscribe all New Shares through its Non-Statutory Preferential Subscription Rights and (ii) to subscribe all New Shares not subscribed

by Existing Shareholders through their Non-Statutory Preferential Subscription Rights at the Issue Price (the "Backstop Commitment"). The procedure provided for by

Article 524 BCC has been applied with respect to the Backstop Commitment (see section 8.11.2).

The Non-Statutory Preferential Subscription Rights will neither be listed on any stock exchange or otherwise tradable or transferrable nor will they be the

subject of an offer or private placement. The Offering is addressed to the Existing Shareholders only who should be aware that the Offering is not structured as

a typical rights issue whereby the preferential subscription rights are tradable and transferable and whereby the non-exercised preferential subscription rights

are sold as scrips to institutional investors. Consequently, in the Offering after the Subscription Period the non-exercised Non-Statutory Preferential

Subscription Rights shall automatically no longer exist and therefore be without value. No consideration shall be offered to holders of non-exercised Non-

Statutory Preferential Subscription Rights.. The Existing Shareholders who do not or only partly exercise their Non-Statutory Preferential Subscription Rights

might therefore suffer a (financial) dilution. Investors are requested to carefully read section 1.2.4 “Dilution of Existing Shareholders not exercising their Non-

Statutory Preferential Subscription Right”.

By investing in the New Shares, an investor carries the risk of losing all or part of its investment as well as other substantial risks and uncertainties, linked, in

particular, to the fact that the shares might lose their value in the event of insufficient profitability or liquidity of the Issuer. Investors are requested to read the

Prospectus and familiarise themselves with the risks described in Section D "Risks" of the Summary (pp. 8 and following) and in section 1 "Risk Factors" of this

Prospectus (pp. 18 and following), and in particular in section 1.1 "Risks relating to the Group and its business" (pp. 18 and following) and in section 1.2 "Risks

relating to the Offering" (pp. 27 and following). Any decision to invest in the New Shares through the Non-Statutory Preferential Subscription Rights in the

context of the Offering must be based on the totality of information provided in the Prospectus.

Lead Manager

PROSPECTUS DATED 10 JUNE 2014

This Prospectus has been approved by the FSMA on 10 June 2014 and relates to the public offering

in Belgium of New Shares for an amount of €13,243,538 to be issued pursuant to a capital increase

with Non-Statutory Preferential Subscription Rights to the Existing Shareholders (the “Offering”)

and (ii) the admission to trading and listing on Euronext Brussels of the New Shares (the “Listing”).

The Prospectus contains (i) a description of the Issuer (including the risk factors attached to the

Issuer and its business), (ii) a description of the New Shares and the Offering (including the risk

factors attached to the New Shares and the Offering), and (iii) a summary of the main characteristics

of the New Shares and the Offering, as well as a summary description of the Issuer (and a summary

of the risk factors). In case of inconsistency between the summary and the body of the Prospectus,

the latter documents shall prevail.

The Prospectus will be made available to investors at no cost at the registered offices of the Issuer.

The Prospectus will also be made available to investors at no cost upon request to Bank Degroof at

+32 2 287 91 56. Subject to certain conditions, this Prospectus is also available on the internet at the

following websites: www.zenitel.com or www.degroof.be.

The Prospectus has been prepared in English. A summary has been translated into Dutch and

French. The Issuer, Zenitel SA/NV, with registered office Z1 Research Park, 110, 1731 Zellik,

represented by its board of directors, assumes responsibility for the content of this Prospectus and

for the content of the English, Dutch and French versions of this summary, in accordance with

Article 31 of the Act of 16 June 2006. Investors may rely on the translations of the summary in the

context of its contractual relationships with the Issuer.

Any decision to invest in the New Shares should be based on an exhaustive analysis of the

Prospectus by the investor.

http://www.zenitel.com/

http://www.degroof.be/

TABLE OF CONTENTS

SUMMARY ............................................................................................................................................ 1

1. RISK FACTORS ...................................................................................................................... 18

1.1 Risks relating to the Group and its business ............................................................................. 18

1.1.1 Technology risk ........................................................................................................................ 18

1.1.2 Macro-economic risks .............................................................................................................. 18

1.1.3 Acquisition risks ....................................................................................................................... 19

1.1.4 Litigations................................................................................................................................. 19

1.1.5 Regulatory change risks ........................................................................................................... 19

1.1.6 Exchange rate fluctuation risks ................................................................................................ 19

1.1.7 Interest rate fluctuation risks ................................................................................................... 21

1.1.8 Lack of access to liquidity ........................................................................................................ 23

1.1.9 Inability to attract and retain personnel .................................................................................. 23

1.1.10 Goodwill impairment risk ......................................................................................................... 23

1.1.11 Inventory & sourcing risks ....................................................................................................... 24

1.1.12 Credit risk ................................................................................................................................. 24

1.1.13 Force majeure risks .................................................................................................................. 24

1.1.14 Compliance and governmental regulations ............................................................................. 24

1.1.15 IT risks ...................................................................................................................................... 25

1.1.16 Zenitel’s technology is not patented and can be imitated by its competitors ........................... 25

1.1.17 The operations of some of the Group's suppliers are subject to additional risks that are

beyond its control and that could harm its business ............................................................................. 25

1.1.18 Risks relating to trading sanctions and embargoes could have a negative impact on the

Group’s results of operations................................................................................................................ 26

1.1.19 The Group is active in a limited number of niche markets. ...................................................... 26

1.1.20 The Group commercialises its products through a network of distributors worldwide ........... 26

1.1.21 Project risks in the Wireless Systems activities ........................................................................ 26

1.1.22 Specific risks in Caribbean ...................................................................................................... 26

1.2 Risks relating to the Offering ................................................................................................... 27

1.2.1 The Group cannot guarantee that an active trading market will develop for the shares ......... 27

1.2.2 The market price of the shares may fluctuate and decline below the Issue Price and trading

in the shares may be limited, which might lead to shareholders not being able to sell their shares at

a reasonable price. ................................................................................................................................ 27

1.2.3 Future sale of a significant number of shares could have a material adverse effect on the

price of the shares ................................................................................................................................. 28

1.2.4 Dilution of Existing Shareholders not exercising their Non-Statutory Preferential

Subscription Right ................................................................................................................................. 28

1.2.5 Take-over Offers ....................................................................................................................... 29

2. INFORMATION AND CAUTIONARY STATEMENTS ...................................................... 29

2.1 Approval of the Prospectus ...................................................................................................... 29

2.2 Person responsible for the Prospectus ...................................................................................... 30

2.3 No representation ..................................................................................................................... 30

2.4 Notices to Existing Shareholders ............................................................................................. 30

2.5 Certain restrictions on the Offering .......................................................................................... 31

2.5.1 General ..................................................................................................................................... 31

2.5.2 Notice to Existing Shareholders in the United States ............................................................... 32

2.5.3 Notice to Existing Shareholders in the European Economic Area ........................................... 32

2.5.4 Notice to Existing Shareholders in the United Kingdom.......................................................... 32

2.5.5 Notice to Existing Shareholders in Canada, Australia or Japan ............................................. 33

2.6 Forward-looking statements ..................................................................................................... 33

2.7 Rounding .................................................................................................................................. 33

2.8 Industry and other statistical information ................................................................................. 34

2.9 Statutory auditor ....................................................................................................................... 34

2.10 Information incorporated by reference ..................................................................................... 35

2.11 Available information .............................................................................................................. 37

2.11.1 Prospectus ................................................................................................................................ 37

2.11.2 Issuer documents and other information .................................................................................. 37

3. ESSENTIAL INFORMATION ................................................................................................ 38

3.1 Selected financial information.................................................................................................. 38

3.2 Working Capital Statement ...................................................................................................... 40

3.3 Capitalisation and indebtedness ............................................................................................... 40

3.4 Reasons for the Offering and use of proceeds .......................................................................... 42

3.5 Interest of natural and legal persons involved in the Offering ................................................. 43

3.6 Impact of the Offering: dilution and major shareholding ......................................................... 43

4. INFORMATION CONCERNING THE NEW SHARES ........................................................ 45

4.1 Type, class and dividend entitlement ....................................................................................... 45

4.2 Applicable law and jurisdiction ................................................................................................ 45

4.3 Form and transferability of the New Shares ............................................................................. 45

4.4 Currency of the issue ................................................................................................................ 46

4.5 Rights attached to the New Shares ........................................................................................... 46

4.6 Taxation in Belgium ................................................................................................................. 46

4.6.1 Belgian Withholding Tax .......................................................................................................... 46

4.6.2 Belgian Income Tax .................................................................................................................. 48

4.6.3 Stamp Duties ............................................................................................................................ 52

4.6.4 The proposed financial transactions tax ("FTT") .................................................................... 52

5. INFORMATION ON THE OFFERING .................................................................................. 54

5.1 Decision of the Issuer ............................................................................................................... 54

5.2 Maximum amount of the Offer ................................................................................................ 55

5.3 Terms of subscription ............................................................................................................... 55

5.4 Withdrawal and suspension of the Offer .................................................................................. 55

5.5 Reduction of the subscription ................................................................................................... 55

5.6 Revocation of subscription orders ............................................................................................ 56

5.7 Payment for and delivery of the New Shares ........................................................................... 56

5.8 Publication of the results of the Offering ................................................................................. 56

5.9 Procedure for exercise of Non-Statutory Preferential Subscription Rights .............................. 56

5.9.1 Offering .................................................................................................................................... 56

5.9.2 Backstop Commitment .............................................................................................................. 57

5.9.3 Subscription .............................................................................................................................. 57

5.10 Indicative timetable for the Offering ........................................................................................ 58

5.11 Plan for the distribution and allocation of the New Shares ...................................................... 58

5.11.1 Categories of potential investors .............................................................................................. 58

5.11.2 Shares held by the Issuer .......................................................................................................... 58

5.11.3 Intention of reference shareholders ......................................................................................... 59

5.11.4 Pre-allocation information ....................................................................................................... 59

5.11.5 Over-allotment and "green shoe" ............................................................................................. 59

5.12 Determination of the Issue Price .............................................................................................. 59

5.13 Placement and underwriting ..................................................................................................... 59

5.13.1 Selling agent ............................................................................................................................. 59

5.13.2 Financial service ...................................................................................................................... 59

5.14 Underwriting Agreement .......................................................................................................... 59

5.15 Admission to trading and dealing arrangements ...................................................................... 60

5.15.1 Listing and admission to trading .............................................................................................. 60

5.15.2 Liquidity provider ..................................................................................................................... 60

5.15.3 Stabilisations ............................................................................................................................ 60

5.16 Name of the person or entity offering to sell the Shares and standstill period ......................... 60

5.17 Lock-up arrangements .............................................................................................................. 60

5.18 Expenses incurred with the Offering ........................................................................................ 61

5.19 Dilution .................................................................................................................................... 61

6. INFORMATION ABOUT THE ISSUER ................................................................................ 63

6.1 Corporate purpose .................................................................................................................... 63

6.2 Corporate profile ...................................................................................................................... 63

6.2.1 Corporate name ........................................................................................................................ 63

6.2.2 Registered office ....................................................................................................................... 63

6.2.3 Incorporation, amendment to the articles of association and term .......................................... 64

6.2.4 Register of Legal Entities ......................................................................................................... 64

6.2.5 Legal form ................................................................................................................................ 64

6.2.6 Financial year .......................................................................................................................... 64

7. SHARE CAPITAL ................................................................................................................... 65

7.1 Share capital ............................................................................................................................. 65

7.1.1 Share capital ............................................................................................................................ 65

7.1.2 Authorised Capital ................................................................................................................... 65

7.1.3 Other securities ........................................................................................................................ 65

7.1.4 Acquisition rights and options .................................................................................................. 65

7.1.5 Dividend policy ........................................................................................................................ 65

7.1.6 Evolution of the share price ..................................................................................................... 65

7.2 Rights attached to the shares .................................................................................................... 66

7.2.1 Voting rights ............................................................................................................................. 66

7.2.2 Right to attend general meetings .............................................................................................. 67

7.2.3 Rights to dividends ................................................................................................................... 69

7.2.4 Rights in case of dissolution and liquidation ........................................................................... 69

7.2.5 Modification of share capital ................................................................................................... 70

7.2.6 Restrictions on free transferability ........................................................................................... 71

7.2.7 Governing law and jurisdiction ................................................................................................ 71

7.3 Purchase and sale of own shares .............................................................................................. 72

7.4 Notification of major holdings ................................................................................................. 73

7.5 Takeover bids, squeeze-out and sell-out rules .......................................................................... 73

7.5.1 Public takeover bids ................................................................................................................. 73

7.5.2 Squeeze-out............................................................................................................................... 74

7.5.3 Sell-out right ............................................................................................................................. 74

7.5.4 Takeover bids instigated by third parties during the previous financial year and the current

financial year ........................................................................................................................................ 75

8. MANAGEMENT AND GOVERNANCE ............................................................................... 76

8.1 General ..................................................................................................................................... 76

8.2 Board practices ......................................................................................................................... 76

8.2.1 General provisions ................................................................................................................... 76

8.2.2 Chairman of the board of directors .......................................................................................... 77

8.2.3 Independent directors ............................................................................................................... 77

8.2.4 Composition of the board of directors ..................................................................................... 78

8.3 Executive committee ................................................................................................................ 80


8.4 Daily Management ................................................................................................................... 80

8.4.1 CEO .......................................................................................................................................... 80

8.4.2 Executive Team ........................................................................................................................ 81

8.4.3 Senior Management Team ........................................................................................................ 81

8.5 Other boards' committees ......................................................................................................... 82

8.5.1 Audit Committee ....................................................................................................................... 82

8.5.2 Nomination and Remuneration Committee .............................................................................. 83

8.6 Litigation statement concerning directors and members of the executive committee.............. 84

8.7 Corporate governance charter .................................................................................................. 84

8.8 Remuneration and benefits ....................................................................................................... 85


8.8.2 Remuneration policy for directors ........................................................................................... 86

8.8.3 Remuneration policy of the CEO and the members of the Executive Team and other

members of management ....................................................................................................................... 87

8.9 Shares and options held by directors and Executive Team ...................................................... 88

8.10 Statutory auditor ....................................................................................................................... 88

8.11 Related party transaction .......................................................................................................... 88

8.11.1 Directors' conflicts of interest .................................................................................................. 88

8.11.2 Transactions with affiliated parties .......................................................................................... 89

8.12 Major shareholders ................................................................................................................... 90

9. BUSINESS OVERVIEW ......................................................................................................... 92

9.1 Introduction to the Issuer .......................................................................................................... 92

9.1.1 Overview................................................................................................................................... 92

9.1.2 Issuer's history and development ............................................................................................. 92

9.2 Group structure ......................................................................................................................... 94

9.3 Principal activities .................................................................................................................... 94

9.4 Market overview ...................................................................................................................... 97

9.4.1 Secure Communication Systems ............................................................................................. 100

9.4.2 Caribbean ............................................................................................................................... 103

9.5 Strategy .................................................................................................................................. 104

9.6 The Issuer's competitive strengths .......................................................................................... 105

9.7 Principal investments ............................................................................................................. 106

9.8 Trends ..................................................................................................................................... 109

9.9 Significant change on Issuer's financial or trading position ................................................... 110

9.10 Offices .................................................................................................................................... 110

9.11 Environment ........................................................................................................................... 113

9.12 Research and development ..................................................................................................... 113

9.13 Intellectual property ............................................................................................................... 114

9.14 Competition ............................................................................................................................ 115

9.14.1 Off-shore................................................................................................................................. 115

9.14.2 On-shore ................................................................................................................................. 116

9.15 Human Resources ................................................................................................................... 117

9.16 Legal and arbitration proceedings .......................................................................................... 117

9.17 Material contracts ................................................................................................................... 118

9.18 Information on holdings ......................................................................................................... 118

10. OPERATING AND FINANCIAL REVIEW AND PROSPECTS ........................................ 119

10.1 Overview ................................................................................................................................ 119

10.2 Analysis of consolidated income statement ........................................................................... 119

10.3 Analysis of consolidated balance sheet .................................................................................. 121

10.4 Analysis of consolidated cash flow statement ........................................................................ 126

10.5 Key developments since 31 December 2013 ......................................................................... 127

10.6 Current trading and prospects................................................................................................. 128

11. FINANCIAL INFORMATION ............................................................................................. 129

11.1 Historical financial information ............................................................................................. 129

11.2 Financial statements ............................................................................................................... 131

11.3 Auditing of historical annual financial information ............................................................... 134

11.4 Interim and other financial information ................................................................................. 147

12. GLOSSARY ........................................................................................................................... 148

1

SUMMARY

This document (the "Summary") summarizes the prospectus approved by the FSMA (Financial Services and

Markets Authority, the "FSMA") on 10 June 2014, (together with all information incorporated therein by

reference, the " Prospectus ") relating to (i) the public offering to subscribe to New Shares of the Issuer in the

context of a capital increase in cash with Non-Statutory Preferential Subscription Rights (the '"Offer"), and

(iii) the admission of the New Shares to trading on the regulated market of Euronext Brussels (the "Listing").

The English version of the Prospectus, including the Summary, was approved on 10 June 2014 by the FSMA,

in accordance with Article 23 of the Act of 16 June 2006. The FSMA's approval does not imply any judgement

on the merits or the quality of the Offer, the Listing, the New Shares or the Issuer.

The Summary was prepared in accordance with the requirements, in terms of content and form, set out in

Commission Regulation (EC) No 809/2004 of 29 April 2004, implementing the Prospectus Directive. For the

purposes of this regulation, summaries are composed of required information, referred to as "Elements".

These Elements are enumerated in Sections A-E (A.1 - E.7).

The Summary contains all Elements which must be included in a summary for this type of security and issuer.

As certain Elements need not be included, there may be breaks in the numbering of the Elements.

While a given Element must be included in the Summary due to the nature of the securities and the issuer, it is

possible that no relevant information is available about the Element in question. In this case, a brief

description of the Element is included in the Summary, with the mention "not applicable".

2

Section A - Introduction and warnings

A.1 Introduction

The Summary should be read as an introduction to the Prospectus.

Any decision to invest in the New Shares must be based on an exhaustive reading by the investor of the

Prospectus in its entirety, including any information incorporated therein by reference.

When a claim relating to the information contained in the Prospectus is brought before a court, the

investor acting as the plaintiff may, in accordance with the national law of the Member States, have to

bear the translation costs of the Prospectus before the start of legal proceedings.

Only the Issuer can be held civilly liable, but only if the content of the Summary is misleading,

inaccurate or inconsistent with other parts of the Prospectus or if it does not provide, when read in

conjunction with other parts of the Prospectus, key information to assist investors who are considering

investing in the New Shares.

A.2 Not applicable. No consent has been given by the Issuer to the use of the Prospectus for the purpose of

subsequent resale of the New Shares or their final placement by financial intermediaries.

Section B - Issuer and possible guarantor

B.1 Legal and commercial name of the Issuer

"Zenitel".

B.2 Registered office/Legal form/Applicable law/Country of incorporation

Zenitel is a public limited liability company (naamloze vennootschap/société anonyme) organised and

existing under the laws of Belgium which has offered its securities to the public, with its registered

office at Z1 Research Park, 110, 1731 Zellik, Belgium (RLE Brussels 0403.150.608).

B.3 Description of the Issuer’s operations and its principal activities

Zenitel’s Secure Communication Systems (SCS) division is a global supplier of intercom products and

related products and services to the secure communications market through its brands Vingtor (for off-

shore markets : marine and oil & gas), Stentofon (for on-shore markets : building security, industry and

transportation) ) and Zenitel (wireless systems).

In addition, Zenitel operates a public safety network in the dutch Antilles (Caribbean division).

Zenitel is listed on the Euronext stock exchange in Brussels, with its statutory headquarters situated in

Belgium and its operational headquarters in Norway. Zenitel is represented in 18 countries.

B.4a Description of the most significant recent trends affecting the issuer and the industries in which it

operates

The major trend is to increasingly use the IP technology as a platform and back bone. IP is an open

architecture that easily integrates one product with others. A modern security system usually integrates

video, access control and audio. The integration can be done in a cost efficient way via software.

Analogue technology is still less expensive than IP technology. As a consequence, many customers

continue to buy analogue products. We see this for both in on-shore and off-shore markets.

B.5 Description of the Issuer's group and the Issuer's position within that group

The Group structure is as follows:

3

B.6 Disclosure of substantial shareholdings

The shareholder structure at the date of the Prospectus is as follows (as it appears from the notifications

received by the Issuer):

Shareholders Number of shares % of total

De Wilg GCV* 2,000,000 12.08%

3D NV* 5,546,875 33.51%

The Issuer (Zenitel Norway AS) 113,113 0.68%

QuaeroQ CVBA 2,481,150 14.99%

Freefloat 6,413,284 38.74%

Total 16,554,422 100.00%

* Acting in concert

Each shareholder of the Issuer is entitled to one vote per share, irrespective of the proportion held in the

capital of the Issuer.

The Issuer has not issued any warrant, convertible obligation, option or any other right to subscribe to

existing or new voting securities.

The impact of the Offering on the shareholding structure of the Issuer depends on the extent Existing

Shareholders exercise their Non-Statutory Preferential Subscription Rights and can be summarised as

follows:

Depending on the number of Non-Statutory Preferential Subscription Rights exercised by the Existing

Shareholders, their respective participation and voting rights in the Issuer will vary.

3D NV² 5,546,875 33.51% 11,206,863 33.85% 16,654,080 50.30% 22,101,297 66.75%

De Wilg GCV² 2,000,000 12.08% 4,000,000 12.08% 3,000,000 9.06% 2,000,000 6.04%

The Issuer (Zenitel Norway AS) 113,113 0.68% 113,113 0.34% 113,113 0.34% 113,113 0.34%

QuaeroQ CVBA 2,481,150 14.99% 4,962,300 14.99% 3,721,725 11.24% 2,481,150 7.49%

Freefloat 6,413,284 38.74% 12,826,568 38.74% 9,619,926 29.06% 6,413,284 19.37%

Total 16,554,422 100.00% 33,108,844 100.00% 33,108,844 100.00% 33,108,844 100.00%

1 3D NV always executes its Backstop Commitment

² Acting in concert

After capital increase whereby

shareholders have exercised 0%

of their rights1


shareholders have exercised

100% of their rights

Shareholding before capital

increase



50% of their rights1

4

Depending on the number of Non-Statutory Preferential Subscription Rights exercised by other Existing

Shareholders, 3D NV’s participation and voting rights in the Issuer after the Offering may exceed 50%

following the execution of the Backstop Commitment.

5

B.7 Key historical financial information

CONSOLIDATED KEY FIGURES

THOUSANDS OF EUR 2013 2012 2011

Restated

FROM CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Revenue 67 403 64 706 62 977

Profit before tax 1 877 977 612

Profit for the year 1 761 883 549

FROM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Total assets 37 771 41 030 41 221

Shareholders' equity 6 884 7 845 5 862

of which share capital and reserves 20 301 42 202 40 940

of which retained earnings (13 417) (34 357) (35 078)

Working capital 2 473 1 238 2 171

Total financial debt (1) 9 365 9 907 11 475

Total provisions (2) 4 664 5 762 6 270

Cash and cash equivalents 3 901 4 975 4 294

FROM CONSOLIDATED STATEMENT OF CASH FLOWS

Net cash flows from operating activities 3 560 6 075 4 670

Net cash flows from investing activities (4 091) (3 942) (3 033)

Net cash flows from financing activities (1 713) (1 619) (2 221)

Net cash and cash equivalents at the end of the year (3) 640 2 885 2 371

ALTERNATIVE PERFORMANCE MEASURES

EBITDA (4) 4 770 4 679 4 313

Operating profit (EBIT) 3 115 2 221 1 501

RATIOS

Shareholders' equity ratio (5) 18.2% 19.1% 14.2%

Shareholders' equity ratio including off-balance debt(6) 14.5% 14.8% 11.4%

Net debt (7) / EBITDA 1.1 1.1 1.7

Net debt (7) and provisions (2) / EBITDA 2.1 2.3 3.1

Weighted average number of shares (in thousands)(8) 16 441 16 441 16 441

Shareholders' equity/share (EUR) 0.42 0.48 0.36

Profit for the year/share (EUR) 0.11 0.05 0.03

Return On Capital Employed (9) 30.2% 20.9% 13.2%

OTHER KEY FIGURES

Personnel 270 249 246

Off-balance debt (in thousands) (10) 9 685 11 686 10 048

(1) Total financial debt: long term and short term interest bearing loans and borrowings

(2) Total provisions: Retirement benefit obligations plus provisions (both current and non current)

(3) Net cash and cash equivalents : Total cash and cash equivalents minus used factoring facility minus bank overdraft

(4) EBITDA: earnings before interest & taxes, depreciation and amortization plus

write-offs on current assets

(5) Shareholders' equity ratio : Shareholders' equity / (shareholders' equity + liabilities)

(7) Net debt: Total financial debt minus cash and cash equivalents

(8) Weighted average number of shares : Total number of shares minus treasury shares

(9) Return On Capital Employed (ROCE) : EBIT / (tangible assets + intangible assets + working capital)

(10) Off-balance debt : Operating lease agreements relating to office premises, site rents, car lease and IT equipment.

(6) Shareholders' equity ratio including off-balance debt : Shareholders' equity / (shareholders' equity + liabilities + off-

balance debt).

6

B.8 Important pro forma financial information

Not applicable. No pro forma financial information has been given in the Prospectus.

B.9 Profit forecasts or estimates

Not applicable. No profit forecasts or estimates have been given in the Prospectus.

B.10 Qualifications in the audit report with respect to the historical financial information

Not applicable. No qualifications have been made in the auditor's statement on the historical financial

information contained in the Prospectus.

For the avoidance of doubt, it should be noted however that the Auditor delivered an unqualified opinion

with an emphasis of matter paragraph on the historical financial information contained in the Prospectus.

The unqualified opinion with an emphasis of matter paragraph given by the Auditor for the consolidated

financial statements of the Issuer for the year ended on 31 December 2013 is as follows:

"In our opinion, the consolidated financial statements of the company Zenitel NV as of 31 December

2013 give a true and fair view of the net assets and financial position of the group as at 31 December

2013, as well as its consolidated results and cash flows for the year then ended, in accordance with

International Financial Reporting Standards as adopted by the European Union.

In the past the company and its subsidiaries (jointly “the group”) has incurred significant losses that

fundamentally affected the financial position. Without modifying the above conclusion, we would like to

draw your attention to the going concern paragraph in the (consolidated) annual report, in which the

Board of Directors justifies the application of the valuation rules under the going concern assumption.

The assumption to continue as a going concern is only valid in the case the group continues to have

access to short and medium term financing. No adaptations have been made to the consolidated

financial information as to the valuation or the classification of certain items in the statement of

financial position which would be necessary if the group is no longer able to continue its activities."

B.11 Working capital statement

On the date of this Prospectus, the Issuer is of the opinion that, taking into account its available cash and

equivalents, it has sufficient working capital to meet its present requirements and cover the working

capital needs for a period of at least 12 months as of the date of the Prospectus.

Section C - Securities

C.1 Type and category of new shares/ ISIN code

The New Shares are registered or dematerialised, depending on the preference of the shareholder. The

investors are requested to indicate whether they want to receive the New Shares to which they are

subscribing (i) in dematerialised form or (ii) in registered form.

For the shareholders who choose dematerialised New Shares, the New Shares will be deposited on

issue through Euroclear Belgium on the securities account of the shareholder. The number of

dematerialised shares in circulation at any given time will be registered in the related register of shares

in the name of the settlement agency.

For the shareholders who choose registered New Shares, the New Shares will be registered in the

register of shareholders of the Issuer on issue.

All New Shares will be issued as ordinary shares that represent capital (in €) of the same category,

freely tradable, with voting rights, without nominal value. All New Shares will have the same rights as

the existing shares of the Issuer.

Like the existing shares, the New Shares shall bear ISIN code BE0003806230.

7

C.2 Currency

The issue shall be made in euro (EUR).

C.3 Number of shares and nominal value

Zenitel's share capital is represented by 16,554,422 existing shares on the date of the Prospectus. The

existing shares are in registered or dematerialised form, entirely paid-up and without par value. There

is only one category of shares.

C.4 Rights attached to the New Shares

1. Voting rights

Each share carries the right to a vote, without prejudice to the cases provided for by law in which

voting rights are suspended.

2. Dividends

Without prejudice to the following, all shares shall share, in the same manner, in the profits of the

Issuer and confer an entitlement to a share of any dividends distributed by the Issuer.

The New Shares will participate in the results of the entire financial year that begins on 1 January 2014

and every subsequent financial year.

A more detailed description of the Issuer's dividend policy is set out in Element C.7.

3. Liquidation rights

The liquidation proceeds, after settling all debts, expenses and liquidation fees, shall be allocated pro

rata amongst all shareholders, in proportion to their shareholdings.

4. Preferential right in the event of a capital increase

On the occasion of a capital increase by means of a cash contribution, the general meeting or, if

applicable, the board of directors of the Issuer, in the context of the authorised capital, may cancel or

restrict the shareholders' preferential subscription right granted by the Company Code provided the

specific procedure required by the Company Code are complied with.

C.5 Share transfer restrictions

Without prejudice to general restrictions, there are no restrictions on the free transferability of the New

Shares other than those which may arise from the law. 3D NV has agreed to a lock-up starting as of the

Listing Date and ending six (6) months after the Listing Date.

C.6 Admission to trading and place of listing

The Non-Statutory Preferential Subscription Rights (coupon No. 3) will be separated on 10 June 2014

after the closing of the stock exchange. The Non-Statutory Preferential Subscription Rights will not be

tradable on the stock exchange and are non-tradable and non-transferrable.

The existing shares of the Issuer will therefore be traded “ex-Non-Statutory Preferential Subscription

Right” as from 11 June 2014. Any sale of existing shares of the Issuer prior to the closing of the

regulated market of Euronext Brussels on 10 June 2014 will be settled "cum Non-Statutory Preferential

Subscription Rights ". Any existing shares of the Issuer sold after the closing of the regulated market of

Euronext Brussels on 10 June 2014 will be sold and settled "ex Non-Statutory Preferential Subscription

Rights". A request for admission of the New Shares to Euronext Brussels has been made. Admission

will occur in principle on 24 June 2014 under ISIN code BE0003806230 (like the existing shares).

8

C.7 Description of the dividend policy

In view of the losses realized in the fiscal years before the publication of the Prospectus, the decreasing

but still high levels of debt and provisions and the growth strategy of the Group, no dividends have

been paid out for the financial years ended on 31 December 2011, 31 December 2012 and 31

December 2013.

The Issuer cannot make any predictions about the share price after the New Shares are issued as per the

present Offering and points out that it does not currently plan to develop a distribution pay-out policy

in the near future.

Section D - Risks

Potential investors should bear in mind that the risks relating to the Issuer and the New Shares summarised in

the following section are those risks which the Issuer considers to be the most significant, on the date of the

Prospectus, so that potential investors are able to determine if they wish to invest in the New Shares. However,

given that the risks which the Issuer faces depend on events and circumstances which may or may not occur in

the future, potential investors must consider not only the information about key risks summarised in this section

but also, amongst other things, the risks and uncertainties described in the entire Prospectus.

D.1

Main risks specific to the Issuer

Technology risk: The Group is active in selected professional markets for communication technologies

and must define the right products to introduce into each market. The Group faces the risk of (i) not

being the first to market a new product, (ii) using third-party components that do not meet the expected

quality levels, (iii) not achieving the expected sales volume or profitability, (iv) introducing new

products that are not yet ready to be marketed, (v) new technology replacing current technology

marketed by the Group, (vi) availability of third party components (temporarily or permanently).

Macro-economic risks: An overall negative economic climate, a lack of liquidity in the financial

markets, or a global stock market collapse may slow down the Group’s customers and partners or render

them unable to secure the funds for planned investments.

Acquisition risks: Part of the Group’s long-term growth strategy is based on acquisitions. Therefore,

there are risks associated with the acquisition itself as well as risks related to the integration of the

acquired company in the Group which may result in impaired goodwill.

Litigations: The Group has certain pending litigations that can be qualified as contingent liabilities

according to the definition of IFRS. The outcome of these litigations is uncertain. The Group believes

that it has, in agreement with its Auditor, sufficiently provisioned for these potential liabilities. However,

no guarantee can be given that this will be the case and there is a risk that the Group will need to pay

some or all of these contingent liabilities in the near future.

Regulatory change risks: Changes in laws and regulations can significantly affect the Group's ability to

efficiently conduct business.

Exchange rate fluctuations risks: The Group is exposed to fluctuations in exchange rates which may

lead to profit or loss in currency transactions. As the Group has substantial activities in the United States,

Norway and Asia, changes in the exchange rate of the USD, the NOK and the SGD against the euro may

affect the Group’s consolidated accounts. Moreover, the Group operates internationally and is exposed to

foreign exchange risks as a result of the foreign currency transactions entered into by its different

subsidiaries in currencies other than their functional currency, primarily with respect to USD, ANG,

NOK, SGD and DKK.

Interest rate fluctuation risks: The Group is exposed to interest rate risk as entities in the Group

borrow funds at both fixed and floating interest rates. The Group’s sensitivity to interest rate is mainly

determined by the floating rate on both the short term bank borrowings and the shareholder loans, on

which variable interest rates are applicable.

9

Lack of access to liquidity: The solvability ratio (total equity divided by total equity and liabilities) for

the Group is low and the liquidity ratio (current assets divided by current liabilities) has decreased the

last three years. Currently the Group complies with the terms and conditions of its loans and short term

facilities. The Group may however require additional financing from time to time. For various reasons,

including any noncompliance with existing or future lending arrangements, additional financing may not

be available when needed, or may not be available on terms favourable for the Group. As the Issuer has

substantial shareholders’ loans outstanding, in the event the Offering does not take place, the Issuer may

in the short term remain dependent on the financial support of the shareholders. In the past, the Group

has incurred significant losses that fundamentally affected its financial position. Without modifying the

above conclusion, Zenitel would like to draw the attention to the going concern paragraph in the

(consolidated) annual report, in which the board of directors justifies the application of the valuation

rules under the going concern assumption. The assumption to continue as a going concern is only valid

in the case the Group continues to have access to short and medium term financing.

Inability to attract and retain personnel: The Group might be unable to attract and retain competent

personnel for key roles in the future. Potential impacts might include: loss of knowledge of key systems

and specialized skills resulting in a skills and competency gap; loss of corporate knowledge; high staff

turnover; customer dissatisfaction; failure to meet business objectives; increased re-hiring costs; loss of

customers because of the customer-employee relationships.

Goodwill impairment risks: Operating results of the Group’s subsidiaries need to stay good in order to

validate the existing goodwill on the consolidated balance sheet. Insufficient results might result in an

impairment charge in P&L.

Inventory & sourcing risks: There is a risk of failure to contract component suppliers at an acceptable

purchase price, resulting in shortages of raw materials or higher costs, which, in turn, may significantly

affect the Group's capability to provide competitively priced products and services to customers at the

time they are wanted.

In addition, because actual demand may be less than the committed quantity, the risk exists that the

inventory levels are too high, resulting in obsolete inventory items and a financial loss for the Group.

The market price may decline to less than the production cost of the finished products in inventory,

resulting in a financial loss for the Group.

Credit risks: Credit risk encompasses all forms of counter-party exposure, i.e. where counter-parties

may default on their obligations to the Group in relation to lending, hedging and other financial

activities.

Force majeure risks: Events of an exceptional nature (such as a fire) or events on a larger scale (such as

flooding, earthquake or extreme weather conditions) and human related force majeure (such as terrorist

attacks and disease epidemics may affect the Group itself and/or its component suppliers. Especially in

the case of an R&D and/or a manufacturing site, those events may seriously affect the Group’s

competitive position, as they may disrupt deliveries to customers or postpone new product releases.

Compliance and governmental regulations: In a company of the Group’s size and scope, an

employee’s action can result in a breach of laws and regulations or company ethics. Any resulting

criminal prosecution or fine can of course have a negative effect on the Group’s image, business and

share value. This risk is higher in emerging markets, as the knowledge of local laws and regulations, or

the monitoring of ethical standards, may still be less developed than in more mature markets.

IT risks: The Group makes extensive use of IT systems and platforms to support its operations which

may be adversely affected by a failure in configuration, hardware or software. Changes in IT technology

may cause the Group's information systems to become obsolete and its information systems may become

inadequate to handle its growth resulting in a loss of customers and sales.

Patents risks: The IP rights in the technology and processes that are used to manufacture the Group's

products are often controlled by its suppliers and are generally not unique to the Group. Therefore its

ability to obtain IP protection for its products is limited. Competitors may be able to manufacture and

sell products with characteristics and styling similar to the Group's products.

10

Group's suppliers risks: Some of the Group's suppliers are located outside Western Europe and

manufacture the Group's products in Eastern Europe (approx. 20%) and Asia (approx. 25%). As a result

of these international suppliers the Group is subject to risks associated with doing business abroad such

as political unrest, terrorism, labour disputes and economic instability, the imposition of new laws,

regulations and trade restrictions, reduction of IP rights protection and change in local economic

conditions.

Trading sanctions and embargoes' risks: The increasing imposition of trade sanctions by the US, the

EU and the UN (i.e. Iran, Syria and Sudan), mays have a negative impact on the Group’s business

results, cash flow and operations.

Niche markets' risks: Fluctuations of demand in one or more of the niche markets such as for instance

the number of ships build in the marine market, could have a material effect on the Group’s business

results, operations and financial condition.

Network of distributors' risks: As the Group’s policy is to limit the number of distributors per

geographical zone / country, a distributor going out of business or switching to another provider, can

negatively impact the Group’s capability to continue doing business in that geographical zone / country,

and as a consequence have a negative impact on the business, results of operations, cash flow and

financial condition of the Group.

Project risks in the Wireless Systems activities: The Group is still active in the project business and

faces risks inherent to such business: miscalculation, performance and implementation risk.

Specific risks in Caribbean: There exist technological alternatives for the Group's Tetra network (e.g.

LTE (Long Term Evolution)). There is a risk that ending multi-year contracts will not be renewed or

only for a short term period. Additionally, the possibility exists that existing or new competitors will ask

for and be granted a licence to operate similar networks.

D.3 Main risks associated with the New Shares

Liquidity of the shares: The Group cannot guarantee the extent to which a liquid market for the New

Shares will develop or be sustained. If no liquid market develops for the (New) Shares, the price of the

shares could be adversely affected by this fact. Investors should moreover bear this point in mind when

examining the price at which Zenitel's shares are traded.


Shareholders, 3D NV’s increased stake following the execution of the Backstop Commitment may

reduce the liquidity of the shares of the Issuer.

Volatility of the share price and of the return on the shares: The Issue Price may not be considered

indicative of the market price of the shares after the Offering. The market price of the shares has

experienced volatility in the recent past, and may continue to fluctuate, depending upon many factors

beyond the Group’s control. The market price of the shares is also subject to fluctuations in response to

the Offering and the investor perception of the success and impact of the Offering.

Drop in the price of the shares in the event of a sale of a significant number of shares: A future sale

of a significant number of shares on the stock market, or the perception that such a sale might occur,

could cause the market price of the shares to decline. The Group cannot predict the effect on the share

price if the shareholders were to decide to sell their shares.

Dilution of the Existing Shareholders not exercising their Non-Statutory Preferential Subscription

Right: To the extent that an Existing Shareholder does not exercise its Non-Statutory Preferential

Subscription Right to subscribe for the New Shares, such Existing Shareholder’s proportionate

ownership and voting interest in the Issuer is likely to be reduced, and the percentage that such

shareholder held in the Issuer's share capital prior to the issuance of the New Shares will accordingly be

reduced. The extent of such dilution in terms of voting rights will be 50% if the shareholder does not

exercise any Non-Statutory Preferential Subscription Rights. The theoretical financial dilution will be

9.1% if the shareholder does not exercise any Non-Statutory Preferential Subscription Rights.

11


Shareholders, 3D NV’s participation and voting rights in the Issuer after the Offering might exceed 50%

following the execution of the Backstop Commitment. This might allow 3D NV to have a majority in the

general meeting of shareholders and, as a result, vote in favour of or against certain decisions.

Take-over Offers: Provisions of the articles of association of the Issuer, contracts entered into by the

Issuer and provisions of Belgian law may discourage takeover offers and may limit the price that

investors would be willing to pay for the shares.

Section E - The Offer

E.1 Net proceeds of the Offer/ Estimated total expenses

The gross proceeds from the Offer amount to €13,243,538. The net proceeds from the Offering are

estimated at €12,993,538.The costs related to the Offering have been estimated at €250,000 and include,

among other things, the fees due to FSMA and Euronext Brussels, the remuneration of the Lead

Manager and the legal advisors and other administrative costs.

E.2a Reasons for the Offer and use of the proceeds

The Offering is aimed at repaying existing Belgian bank debt and shareholders' loans to improve bank

relations. Following the Offering, the Group intends to re-negotiate terms and conditions with financial

institutions. The repayment of the current debt and shareholder loans will automatically free up the

existing pledges and rights currently held by the financial institutions. With no remaining obligations to

banks/financial institutions or shareholders, the Group will be in a position to objectively compare its

future financial partners on a like for like basis. In addition, the Offering will provide the Issuer with

sufficient resources for future internal and external growth. Over the last years the Issuer focused on the

repayment of its outstanding debts and only had limited resources to invest in R&D. If, following the

Offering, its debt and liquidity position is improved, the Issuer will have more resources available to

invest in technology, such as e.g. audio and video integration. The Offering will also allow the Group to

investigate external growth opportunities via acquisitions.

The Issuer will receive the proceeds from the sale of the New Shares, less certain expenses and the fees

associated with the underwriting of the Offering. Such proceeds are expected to be used:

to repay up to €6.0 million for all of its existing Belgian bank debt and shareholders' loans;

to finance up to €1.5 million capital expenditures, i.e. purchasing equipment, machines,

products and spare parts to secure an existing supply stream;

to use the estimated €5.5 million of remaining net proceeds of the Offering for internal and

external growth opportunities and for possible obligations relating to several legal and

arbitration proceedings, of which the outcome remains uncertain in terms of judgment, timing

and amounts.

E.3 Terms and Conditions of the Offer

1. General remarks

The board of directors at its meeting held on 10 June 2014 resolved to approve an increase of the share

capital by contributions in cash by an aggregate amount of up to €10,000,000, plus a share premium of

up to €3,243,538, so as to bring it from its current amount of €10,000,000 represented by

16,554,422 existing shares of the Issuer to up to €20,000,000 represented by 33,108,844 shares of the

Issuer by the issuance of up to 16,554,422 New Shares, offered by preference to the Existing

Shareholders pursuant to the Non-Statutory Preferential Subscription Rights. These Non-Statutory

Preferential Subscription Rights will be represented by coupon No. 3 attached to the existing shares of

the Issuer, the Non-Statutory Preferential Subscription Rights will neither be listed on any stock

exchange or otherwise tradable or transferrable1 nor will they be the subject of an offer or private

placement.

12

The Offering is addressed to the Existing Shareholders who should be aware that the Offering is not

structured as a typical rights issue whereby the preferential subscription rights are tradable and

transferable and whereby the non-exercised preferential subscription rights are sold as scrips to

institutional investors. Consequently, in the Offering after the Subscription Period the non-exercised

Non-Statutory Preferential Subscription Rights shall automatically no longer exist and therefore be

without value. No consideration shall be offered to holders of non-exercised Non-Statutory Preferential

Subscription Rights. The Existing Shareholders who do not or only partly exercise their Non-Statutory

Preferential Subscription Rights might therefore suffer a (financial) dilution.

The board of directors applied the procedure provided for by Article 596 of the BCC with a view to

exclude the preferential subscription rights of the Existing Shareholders. In addition, the procedure

provided for by Article 524 of the BCC has been applied with respect to the unilateral undertaking by 3D

NV.

2. Maximum amount of the Offer

The total amount of the capital increase together with any share premium will be €13,243,538. A

Backstop Commitment provided by 3D NV guarantees the capital increase. The results of the Offering

will be published in the Belgian financial press on or around 20 June 2014.

3. Terms of subscription

Subscription Period

Subscription of the New Shares through the exercise of Non-Statutory Preferential Subscription Rights

shall be possible during the entire Subscription Period, from 13 June 2014 (8:00) until 19 June 2014

(16:00) inclusive.

Subscription Ratio

Subject to restrictions under applicable securities laws, the Existing Shareholders through the exercise of

their Non-Statutory Preferential Subscription Rights can subscribe to the New Shares in an irreducible

way in accordance with the Subscription ratio of one (1) New Share for one (1) Non-Statutory

Preferential Subscription Right held in possession.

Procedure for exercise of Non-Statutory Preferential Subscription rights

Subject to restrictions due to applicable securities laws as described in the Prospectus, the holders of the

Non-Statutory Preferential Subscription Rights will have the right to subscribe to the New Shares, at the

Issue Price and in accordance with the Subscription ratio as from 13 June 2014.

The Non-Statutory Preferential Subscription Rights, represented by coupon No. 3 of the existing shares

of the Issuer, will be separated from the underlying existing shares on 10 June 2014 after the closing of

Euronext Brussels. The Non-Statutory Preferential Subscription Rights will neither be listed on any

stock exchange or otherwise tradable or transferrable nor will they be the subject of an offer or private

placement.

Any sale of existing shares of the Issuer prior to the closing of Euronext Brussels on 10 June 2014 will

be settled “cum Non-Statutory Preferential Subscription Right” and any existing shares of the Issuer sold

after the closing of Euronext Brussels on 10 June 2014 will be sold and settled “ex Non-Statutory

Preferential Subscription Rights”. The Subscription Period will open from 13 June 2014 to 19 June 2014

inclusive, as indicated below.

Subject to restrictions due to applicable securities laws as described in the Prospectus, Existing

Shareholders, whose holding of existing shares is registered in the share register of the Issuer will

receive, at the address indicated in the relevant share register, letters informing them of the aggregate

number of Non-Statutory Preferential Subscription Rights to which they are entitled and of the

procedures that they must follow to exercise their Non-Statutory Preferential Subscription Rights.

Existing Shareholders whose holding of existing shares is held in a securities account will in principle be

informed by their financial institution of the procedure that they must follow to exercise their Non-

Statutory Preferential Subscription Rights.

13

Non-Statutory Preferential Subscription Rights can no longer be exercised after 19 June 2014, which is

the last day of the Subscription Period after which the Non-Statutory Preferential Subscription Rights

shall automatically no longer exist and therefore be without value. No consideration shall be offered to

holders of non-exercised Non-Statutory Preferential Subscription Rights.

Subscription

Subscription requests and the necessary coupons No. 3 representing the Non-Statutory Preferential

Subscription Rights can be submitted free of charge during the Subscription Period at the Lead Manager

or at this institution through any other financial intermediary. The Existing Shareholders are requested to

inform themselves about the costs charged by these other financial intermediaries which they will need

to bear.

Subject to the Subscription ratio, there is no minimum or maximum amount that may be subscribed to

pursuant to the Offering.

The Existing Shareholders should be aware that all New Shares they have subscribed to will be fully

allocated to them. All subscriptions are binding and may not be revoked except as described in the

Prospectus.

4. Backstop Commitment

3D NV has unconditionally committed itself to subscribe at the Issue Price to the remainder of the New

Shares corresponding to the number of non-exercised Non-Statutory Preferential Subscription Rights at

the end of the Subscription Period.

5. Withdrawal and suspension of the Offer

The Issuer has the right to withdraw from or suspend the Offering if an event occurs which enables the

Lead Manager to terminate the Underwriting Agreement.

6. Reduction of the subscription

It will not be possible to reduce the subscription during the Subscription Period. Hence, no procedure to

refund any excess amounts paid by subscribers needs to be organised.

7. Revocation of subscription orders

The Issuer will update the information provided in this Prospectus by means of a supplement hereto if a

significant new factor that may affect the evaluation by an Existing Shareholder of the Offering occurs

prior to the Closing Date of the Offering. Any prospectus supplement will be subject to approval by the

FSMA and will be published in the Belgian financial press.

If a supplement to the Prospectus is published on or prior to the Closing Date of the Subscription Period,

subscribers in the Offering shall have the right to withdraw their subscriptions made prior to the

publication of the supplement (Article 34, §3 of the Act of 16 June 2006).

Such withdrawal must be done within the time limits set forth in the supplement (which shall not be

shorter than two business days after publication of the supplement). If however a supplement to the

Prospectus is published in relation to the termination of the Underwriting Agreement, subscriptions in

the Offering will automatically be withdrawn.

8. Payment for and delivery of the New Shares

The payment of the subscriptions is expected to take place on or around 24 June 2014 and will be done

by debit of the subscriber’s account with the same value date.

Delivery of the New Shares in dematerialised form issued on or around 24 June 2014 will take place on

the date of issue as applicable through the book-entry system of Euroclear Belgium.

Delivery of the New Shares in registered form issued on or around 24 June 2014 will take place on the

date of issue as applicable through the entry in the Issuer's shareholders' register.

14

9. Indicative timetable for the Offer

The Issuer may amend the dates and times of the share capital increase and periods indicated in the

above timetable and throughout the Prospectus. If the Issuer decides to amend such dates, times or

periods, it will inform investors by way of a press release and on the Issuer's Website. Any material

alterations to this Prospectus will be published in a press release, on the Issuer's Website

(www.zenitel.com), on the Lead Manager's website (www.degroof.be) and by way of a supplement to

this Prospectus.

10. Plan for the distribution and allocation of the New Shares

Categories of potential investors

Since the Offering is carried out with the granting of a Non-Statutory Preferential Subscription Right for

the Existing Shareholders, Non-Statutory Preferential Subscription Rights are allocated to all Existing

Shareholders of the Issuer, subject to applicable securities laws. Only the holders of Non-Statutory

Preferential Subscription Rights as well as 3D NV who provides the Backstop Commitment may

subscribe to the New Shares, subject to the applicable securities laws referred to above.

Shares held by the Issuer

The Issuer and its subsidiaries are not allowed to exercise the Non-Statutory Preferential Subscription

Rights attached to the existing shares of the Issuer held by it.

Intentions of the Issuer's reference shareholders

3D NV has unconditionally committed itself (i) to subscribe all New Shares through its Non-Statutory

Preferential Subscription Rights and (ii) to subscribe all New Shares not subscribed by Existing

Shareholders through their Non-Statutory Preferential Subscription Rights at the Issue Price (the

"Backstop Commitment"). In addition, 3D NV has agreed to a Lock-Up.

Calendar

days

Date

Detachment of Coupon No. 3 T-1 10 June 2014

(at closing)

Ex-coupon Date T 11 June 2014

Start of Subscription Period T+2 13 June 2014

(08:00 CET)

End of Subscription Period T+6 19 June 2014

(16:00 CET)

Backstop Commitment execution by 3D NV T+7 20 June 2014

Announcement by the Issuer via the Belgian financial press of

the results of the Offering

T+7 20 June 2014

(after Closing)

Payment Date of the New Shares T+11 24 June 2014

Issuance of the New Shares T+11 24 June 2014

Delivery of the New Shares T+11 24 June 2014

Start of trading on Euronext Brussels of the New Shares T+11 24 June 2014



15

11. Determination of the Issue Price

The Issue Price is fixed at €0.80 per New Share of which €0.6040682 shall represent capital and the

remainder shall be issue premium.

12. Placement

Selling agent

The Selling Agent will be the Lead Manager.

Financial service

The financial services for the shares of the Issuer (including the New Shares) are provided in Belgium by

the Lead Manager. The cost of these financial services is borne by the Issuer. If the Issuer alters its

policy in this matter, this will be announced in the Belgian financial press.

13. Underwriting Agreement

On 10 June 2014, the Issuer entered into an underwriting agreement with the Lead Manager. Pursuant to

the terms and subject to the satisfaction or waiver of the conditions of the Underwriting Agreement, the

Underwriter has agreed to underwrite the Offering by procuring payment for all subscribed New Shares,

except for the New Shares 3D NV has unconditionally committed itself (i) to subscribe through its Non-

Statutory Preferential Subscription Rights and (ii) to subscribe pursuant to its Backstop Commitment.

E.4 Interests of natural and legal persons which are important for the issue/Offer

Eugeen Beckers (permanent representative of Beckers Consulting BVBA) (director and chairman) holds

103,421 shares of the Issuer (0.62% of the share capital) and Kenneth Dåstøl (director and CEO) holds

60,388 shares of the Issuer (0.36% of the share capital) and will participate in the Offering through the

exercise of their Non-Statutory Preferential Subscription Rights.

All New Shares not subscribed by Existing Shareholders through their Non-Statutory Preferential

Subscription Right will be subscribed by 3D NV, which has unconditionally committed itself (i) to

subscribe all New Shares through its Non-Statutory Preferential Subscription Rights and (ii) to subscribe

all New Shares not subscribed by Existing Shareholders through their Non-Statutory Preferential

Subscription Rights at the Issue Price (the "Backstop Commitment").

3D NV holds 5,546,875 shares or 33.51% of the total voting rights. 3D NV also acts in concert with De

Wilg GCV and De Wilg GCV has indicated in its last transparency declaration that it holds 2,000,000

shares. Consequently, together 3D NV and De Wilg GCV hold 7,546,875 shares of the Issuer or 45.59%

of the total voting rights.

Part of the proceeds of the Offering are to be used to repay the shareholders' loans to 3D NV. Per 31

December 2013, the shareholders’ loan to 3D NV amounted to € 4.4 million. Per 30 June 2013, Ethias

notified Zenitel that they had transferred the Zenitel bond to 3D NV at the same terms. 3D NV informed

Zenitel that a postponement of the down payment due in July 2013 was given.

3D NV is the landlord of the building in which Zenitel NV has its offices in Zellik (Belgium). The rent

charged by 3D NV to Zenitel NV is determined on an at arms’ length basis and amounts to €64,000 per

year.

E.5 Name of the person or entity offering to sell the Shares and standstill period

Not applicable. No existing shares of the Issuer will be offered in the Offering.

The Issuer has undertaken to the Lead Manager that during a period of 6 months following the Listing

Date, it shall not issue any new shares or other securities, including options, warrants convertible

securities or other rights to subscribe to any new shares or other securities, or otherwise transfer or

dispose of or enter into any swap or any other transaction (including any derivative transaction) or

commitment with like effect, of whatever kind, which directly or indirectly leads to a total or partial

issue of new shares or securities irrespective whether these are or are not listed on a stock exchange or a

regulated market.

16

E.6 Dilution

There will be no dilution in terms of share capital participation and in terms of dividend rights for the

Existing Shareholders of the Issuer as long as they exercise all their Non-Statutory Preferential

Subscription Rights.

The dilution for the Existing Shareholders (in percentage terms) who do not exercise any of their Non-

Statutory Preferential Subscription Rights can be calculated as follows: 50%, i.e.

S = total amount of shares of the Issuer after the capital increase, i.e. 33,108,844

s = total amount of shares of the Issuer before the capital increase, i.e. 16,554,422

The table below provides a simulation of the dilution for a hypothetical shareholder who owns 10,000

shares of the Issuer under different assumption regarding the part of Non-Statutory Preferential

Subscription Rights he/she wishes to exercise.

The column “Theoretical financial dilution” shows the theoretical financial dilution percent-

ages for Existing Shareholders, in function of different assumptions of their degree of participa-

tion in the capital increase. This theoretical financial dilution results from the fact that the Non-

Statutory Preferential Subscription Rights will be without value if not exercised. It is calculated

as the difference between the 30-day average stock price and the TERP (Theoretical Ex Rights

Price), divided by the 30-day average stock price.

(

)

p = 30-day average share price, i.e. € 0.979

P = Exercise price for the Non-Statutory Preferential Subscription Rights, i.e. € 0.80



Q = Percentage of Non-Statutory Preferential Subscription Rights not being exercised by the

Existing Shareholder


Shareholders exercise their Non-Statutory Preferential Subscription Rights and can be summarised as

follows:

17

Depending on the number of Non-Statutory Preferential Subscription Rights exercised by the Existing

Shareholders, their respective participation and voting rights in the Issuer will vary.


Shareholders, 3D NV’s participation and voting rights in the Issuer after the Offering might exceed 50%

following the execution of the Backstop Commitment.

E.7 Estimate of costs charged to investors by the Issuer

The Issuer shall not charge investors any costs for subscription to the Offering.

3D NV² 5,546,875 33.51% 11,206,863 33.85% 16,654,080 50.30% 22,101,297 66.75%

De Wilg GCV² 2,000,000 12.08% 4,000,000 12.08% 3,000,000 9.06% 2,000,000 6.04%


QuaeroQ CVBA 2,481,150 14.99% 4,962,300 14.99% 3,721,725 11.24% 2,481,150 7.49%

Freefloat 6,413,284 38.74% 12,826,568 38.74% 9,619,926 29.06% 6,413,284 19.37%

Total 16,554,422 100.00% 33,108,844 100.00% 33,108,844 100.00% 33,108,844 100.00%





of their rights1





increase




18

1. RISK FACTORS

Investing in the New Shares involves a high degree of risk. Investors should consider carefully the

following risk factors, together with the other information contained in the Prospectus, before

making any investment decision concerning the New Shares. If any risk set out below were to occur,

the Group's business, future prospects, financial condition and/or results of operation could be

negatively affected and this may have an impact on the trading price or value of New Shares. These

risks are not the only risks to which the Group is currently exposed and, in the future, may be

exposed. The order in which the individual risks are presented is not indicative of their likelihood to

occur nor of the severity or significance of the individual risks. One or more of the risks described

below could affect the Group or the New Shares simultaneously. Additional risks or uncertainties

not presently known to it or that it currently may consider immaterial or that may not specially

relate to the Group or the Group's business may also have a negative effect on its business, futures

prospects, financial condition and results of operations and thus affect the trading price or value of

New Shares.

1.1 Risks relating to the Group and its business

1.1.1 Technology risk

The Group is active in selected professional markets for communication technologies. In order to

maintain, or attain, market-leader status in each of its key markets, the Group has invested the last

three years between 4% and 5% of revenue in research & development (see also section 9.7

"Principal investments") and will continue to do so. With regard to the selected professional

markets, the Group’s main challenge is to define the right products to introduce into each market.

Risks associated with this challenge are:

Not being the first to market a new product, which may lead to smaller market share than

anticipated or even to discontinuation of the product;

Using third-party components that do not meet the expected quality levels, resulting in

unusually high (or higher than anticipated/provisioned) warranty expenses;

Not achieving the expected sales volume or profitability, due to lack of competiveness;

Introducing new products that are not yet ready to be marketed, resulting in unusually high

(or higher than anticipated/provisioned) warranty expenses;

New technology replacing current technology marketed by the Group;

Availability of third party components (temporarily or permanently).

1.1.2 Macro-economic risks

Beyond the Group’s immediate business environment, an overall negative economic climate, a lack

of liquidity in the financial markets, or a global stock market collapse may have a negative effect on

the Group, its customers and its partners. A recession may slow down the Group’s customers and

partners or render them unable to secure the funds for planned investments. An important part of the

Group’s revenue is dependent on shipbuilding demand which is a cyclical activity. To mitigate the

risks in terms of liquidity and solvability, the Offering is also aimed at reducing the Group’s

outstanding debt position and to improve banking relationships (see also section 3.4“Reasons for the

Offering and use of proceeds”).

19

1.1.3 Acquisition risks

The last five years the Group has not acquired other companies due to the financial situation of the

Group. In the past the Group has incurred significant losses that fundamentally affected the financial

position. (see also section 1.1.7 "Interest rate fluctuation risks", section 1.1.8 "Lack of access to

liquidity", section 3.3 "Capitalisation and Indebtedness" and section 11.3 "Auditing of historical

annual financial information".).

Part of the Group’s long-term growth strategy is, however, based on acquisitions. The Offering will

also allow the Group to investigate external growth opportunities via acquisitions (see also section

3.4 “Reasons for the Offering and use of proceeds”).

Despite the fact that the Group has well-defined parameters for potential acquisitions (strategic and

cultural fit, pricing) and carries out due-diligence processes with the utmost care, acquisitions

always entail risks. These risks may be associated with the integration of the acquired company into

the Group. The growth of the acquired business may be slower than forecasted, or the acquired

technological knowledge may not be as valuable as anticipated. These risks may result in impaired

goodwill.

1.1.4 Litigations

The Group has certain pending litigations that can be qualified as contingent liabilities according to

the definition of IFRS. The outcome of these litigations is uncertain. The Group believes that it has,

in agreement with its Auditor, sufficiently provisioned for these potential liabilities. However, no

guarantee can be given that this will be the case and there is a risk that the Group will need to pay

some or all of these contingent liabilities in the near future (see section 9.16 “Legal and arbitration

proceedings”).

1.1.5 Regulatory change risks

Changes in laws and regulations can significantly affect the Group's ability to efficiently conduct

business. The Group has no impact on decisions of supra-national, national or local governments

which might negatively impact its business.

1.1.6 Exchange rate fluctuation risks

The Group is exposed to fluctuations in exchange rates which may lead to profit or loss in currency

transactions. As the Group has substantial activities in the United States, Norway and Asia, changes

in the exchange rate of the USD, the NOK and the SGD against the euro may affect the Group’s

consolidated accounts. Moreover, the Group operates internationally and is exposed to foreign

exchange risks as a result of the foreign currency transactions entered into by its different

subsidiaries in currencies other than their functional currency, primarily with respect to USD, ANG,

NOK, SGD and DKK. Since most of the Norwegian business is export in the euro currency, Zenitel

Norway AS has a NOK deficit and a Euro surplus. The Group has put in place hedging systems that

secure the needed exchange between EUR/NOK on a rolling 12-month basis. Per 31 December 2013

the Group had in total € 5.6 million in forward sales contracts at a sales rate ranging between 7.965

and 8.202 NOK/EUR and outstanding until October 2014. Revaluation rate ranges between 8,366

and 8.456 NOK/EUR giving a total fair value of € 0.2 million.

20

The below tables give an overview per 31 December 2013/2012 and 2011 of the transactional and

translational foreign currency risks.

As much as foreign currency risk on borrowing is concerned, it is the Group’s policy to have debt in

the subsidiaries as much as possible in the functional currency of the subsidiary. The transactional

currency risk mainly arises from the open foreign currency positions outstanding of group

companies against respectively the Danish krone, the Norwegian krone, the US dollar and the

Singaporean dollar. On the basis of the average volatility during the last 5 years of these currencies

against the Euro for respectively 2013, 2012 and 2011, we estimated the reasonably possible

changes of exchange rate of these currencies as follows:

If the above-indicated currencies had weakened/ strengthened during 2013, 2012 and 2011 by the

above estimated changes against the Euro , with all of the other variables held constant, the 2013,

2012 and 2011 net result would not have been significantly affected (less than € 50 K) in 2013, 2012

and 2011. Neither would there have been a material impact on other components of equity in 2013,

2012 and 2011.

100 percent of the Group’s revenue is generated by its subsidiaries. 86 percent (2012: 84 percent/

2011: 86 percent) of revenue is coming from subsidiaries located in a non-Euro currency country. A

currency translation risk arises when the financial data of these foreign operations are converted

into the Group’s presentation currency, the Euro.

The foreign currencies in which the main Group subsidiaries operate are the Norwegian krone, the

Danish krone, the American dollar, the Singaporean dollar and the Antillean guilder. On the basis

of the average volatility during the last 5 years of these currencies against the Euro for

respectively 2013, 2012 and 2011, we estimated the reasonably possible change of the exchange

rate of these currencies against the Euro as follows:

1 Euro

equals

Closing

rate

31 Dec

2013

Possible

volatility

of rates

in %

Closing

rate

31 Dec

2012

Possible

volatility

of rates

in %

Closing

rate

31 Dec

2011

Possible

volatility

of rates

in %

NOK 8.43 4.6% 8.05 - 8.81 7.38 3.8% 7.10 - 7.67 7.78 3.8% 7.48 - 8.08

USD 1.38 3.9% 1.32 - 1.43 1.32 4.8% 1.26 - 1.39 1.29 4.8% 1.23 - 1.35

SGD 1.75 7.0% 1.62 - 1.87 1.62 6.9% 1.51 - 1.73 1.68 6.9% 1.57 - 1.80

DKK 7.46 0.1% 7.45 - 7.47 7.46 0.1% 7.46 - 7.47 7.43 0.1% 7.43 - 7.44

Rates used for

the sensitivity

analysis

Rates used

for the

sensitivity

analysis

Rates used

for the

sensitivity

analysis

21

If the Euro had weakened/strengthened during 2013, 2012 and 2011 by the above estimated

possible changes against the above listed currencies with all other variables held constant, the 2013

profit would have been € 0.2 million or 12% of net income higher/lower (2012: € 0.05 million or 32%

of net income/2011: € 0.04 million or 8.1% of net income) while the translation reserves in equity

would have been € 1.6 million or 23% of total equity higher/lower (2012: € 1.7 million or 29% of

total equity/2011: € 1.2 million or 20% of total equity).

1.1.7 Interest rate fluctuation risks

The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and

floating interest rates. The Group manages the risk by maintaining an appropriate mix between fixed

and floating rate borrowings. As per year-end 2013 and 2012, the Group has no interest rate swap

contracts or forward interest rate contracts. The following table sets forth details of the remaining

outstanding debt as per year end, with their corresponding average interest rates:

NOK 8.43 7.87 4.56% 8.05 - 8.81 7.51 - 8.23

DKK 7.46 7.46 0.10% 7.45 - 7.47 7.45 - 7.47

USD 1.38 1.33 3.86% 1.33 - 1.43 1.28 - 1.38

SGD 1.75 1.67 7.04% 1.63 - 1.87 1.55 - 1.79

ANG 2.51 2.42 40.00% 1.51 - 3.51 1.45 - 3.39

NOK 7.38 7.48 4.70% 7.04 - 7.73 7.13 - 7.83

DKK 7.46 7.44 0.09% 7.45 - 7.47 7.44 - 7.45

USD 1.32 1.29 5.48% 1.25 - 1.39 1.22 - 1.36

SGD 1.62 1.61 8.99% 1.47 - 1.76 1.46 - 1.75

ANG 2.41 2.35 40.00% 1.44 - 3.37 1.41 - 3.29

NOK 7.78 7.80 3.85% 7.48 - 8.08 7.50 - 8.10

DKK 7.43 7.45 0.07% 7.43 - 7.44 7.44 - 7.46

USD 1.29 1.40 4.85% 1.23 - 1.35 1.33 - 1.46

SGD 1.68 1.75 6.94% 1.57 - 1.80 1.63 - 1.88

ANG 2.35 2.54 40.00% 1.41 - 3.29 1.53 - 3.56

1 Euro

equals

Closing rate

31 December

2011

Average

rate

2011

Possible

volatility of

rates in

2011

Rates as used in the

sensitivity analysis for 2011

Possible

closing rate

Possible

average rate

1 Euro

equals

Closing rate

31 December

2012

Average

rate

2012

Possible

volatility of

rates in

2012



Possible

closing rate

Possible

average rate

Possible

closing rate

Possible

average rate

1 Euro

equals

Closing rate

31 December

2013

Average

rate

2013

Possible

volatility of

rates in

2013



(Mio-Euro)

Outstanding

debt

31

December

2013

Interest

charge

2013

Average

interest

rate

2013

Possible

volatility

of rate in

2013

Outstanding

debt

31 December

2012

Interest

charge

2012

Average

interest

rate

2012

Possible

volatility

of rate in

2012

Outstanding

debt

31 December

2011

Interest

charge

2011

Average

interest

rate

2011

Possible

volatility

of rate in

2011

Used factoring facility 2.2 0.1 4.45% 3.74% 1.7 0.1 4.64% 4.16% 1.9 0.1 4.72% 5.37%

Bank borrowings 2.6 0.3 3.48% 4.06% 8.0 0.6 5.39% 6.08% 8.4 0.6 5.53% 6.44%

Shareholders' loans 4.4 0.2 6.00% 3.74% 0.0 0.0 3.30% 4.16% 1.0 0.1 4.19% 5.37%

Finance lease liabilities 0.2 0.0 2.88% Fixed Rate 0.2 0.0 4.80% Fixed Rate 0.2 0.0 5.00% Fixed Rate

Other financial liabilities 0.0 0.0 0.00% NA 0.0 0.0 0.00% NA 0.0 0.0 0.00% NA

Total 9.4 0.6 9.9 0.7 11.5 0.8

22

The Group’s sensitivity to interest rate is mainly determined by the floating rate on both the short

term bank borrowings and the shareholder loans, on which variable interest rates are applicable.

When we apply the reasonably possible increase/decrease in the market interest rate (volatilities as

indicated in the table above), with all other variables held constant, the 2013 net result would have

been € 0.01 million lower/higher (2012: € 0.01 million lower/higher and 2011 : € 0.1 million

lower/higher).

The impact on interest income bearing financial assets (such as finance lease receivables and cash

deposits) was not included in this calculation as this impact is only limited.

The estimated volatilities in 2013, 2012 and 2011 as indicated in the table above are based on

average deviations of the interest rate during the respective years.

The Group complies with the terms and conditions of its loans and short term facilities. Zenitel

Norway AS has two financial covenants relating to its short term financing: minimum 30 million

NOK equity and minimum 30% equity ratio; current situation 90 million NOK and 48% equity ratio.

The Issuer has outstanding debt with a Belgian bank for an amount of €1.3 million at 31 December

2013 at an annual interest rate of EURIBOR + 2,85%. This debt is secured by a number of

securities, which include among others a pledge on the business of the Issuer, a pledge on shares of

subsidiaries as well as a pledge on receivables and licence fees.

In relation to a shareholder loan with 3D NV the instalment of 2 July 2013 has been delayed in

agreement with the shareholder and has been postponed to 2 July 2014 (see also section 3.5 “Interest

of natural and legal person involved in the Offering”).

The Offering is aimed at repaying existing Belgian bank debt and shareholders' loans.

The Offering will increase the share capital by contributions in cash by an aggregate amount of

€10,000,000 and will increase the share premium by €3,243,538.

Total future Unexpired Present Total future Unexpired Present Total future Unexpired Present

payments interest value payments interest value payments interest value

expenses expenses expenses

Not later than one year 3 563 373 3 190 2 613 465 2 148 2 558 517 2 041

Between one and five years 2 882 139 2 743 5 988 525 5 463 8 339 1 024 7 315

Later than five years 0 0 0 0 0 0 0 0 0

Total 6 445 512 5 933 8 601 990 7 611 10 897 1 541 9 356

Total future Unexpired Present Total future Unexpired Present Total future Unexpired Present

payments interest value payments interest value payments interest value

expenses expenses expenses

Not later than one year 23 4 19 26 5 21 29 5 24

Between one and five years 96 18 78 103 19 84 95 17 78

Later than five years 91 17 74 124 23 101 115 21 94

Total 210 39 171 253 47 206 239 43 196

The financial lease liabilities are payable as follows :

31 December 2013 31 December 2012

31 December 2011

31 December 2011

Bank borrowings and shareholders loan (originally > 1 year) are payable as follows :

31 December 2013 31 December 2012

23

The Group has some off-balance commitments regarding operating lease. These off-balance

commitments amounted in 2013 to € 9.7 million, in 2012 to € 11.7 million and in 2011 to € 10.0

million at year end. Lease payments recognized in the income statement for 2013 amounted to € 2.7

million, in 2012 € 2.9 million and in 2011 € 2.8 million. Operating lease agreements relate to office

premises, site rents, car lease and IT equipment. See also section 3.3. “Capitalization and

Indebtedness” and section 3.5 "Interest of natural and legal persons involved in the Offering".

1.1.8 Lack of access to liquidity

The solvability ratio (total equity divided by total equity and liabilities) for the Group is low : the

solvability ratio was 18.2% in 2013, 19.1% in 2012 and 14.2% in 2011.The liquidity ratio (current

assets divided by current liabilities) decreased the last three years : the liquidity ratio was 1.11 in

2011, 1.08 in 2012 and 1.00 in 2013.

The Group may require additional financing from time to time. For various reasons, including any

noncompliance with existing or future lending arrangements, additional financing may not be

available when needed, or may not be available on terms favourable for the Group.

As the Issuer has substantial shareholders’ loans outstanding, in the event the Offering does not take

place, the Issuer may in the short term remain dependent on the financial support of the

shareholders.

In the past, the Group has incurred significant losses that fundamentally affected the financial

position. Without modifying the above conclusion, Zenitel would like to draw the attention to the

going concern paragraph in the (consolidated) annual report, in which the board of directors justifies

the application of the valuation rules under the going concern assumption. The assumption to

continue as a going concern is only valid in the case the Group continues to have access to short and

medium term financing (see also section 11.3 "Auditing of historical annual financial information).

1.1.9 Inability to attract and retain personnel

The Group might be unable to attract and retain competent personnel for key roles in the future.

Potential impacts might include: loss of knowledge of key systems and specialized skills resulting in

a skills and competency gap; loss of corporate knowledge; high staff turnover; customer

dissatisfaction; failure to meet business objectives; increased re-hiring costs; loss of customers

because of the customer-employee relationships.

The Group adapts its remuneration and staff development policies to prevailing market standards to

mitigate this risk.

1.1.10 Goodwill impairment risk

Operating results of the Group’s subsidiaries need to stay good in order to validate the existing

goodwill on the consolidated balance sheet. Insufficient results might result in an impairment charge

in P&L. The Group and its Auditor verify the recognised goodwill on a yearly basis.

The Group shows per 31 December 2013 a total of € 3.8 million as goodwill in the consolidated

statement of financial position of the Group. There were no goodwill impairments the last three

years.

24

1.1.11 Inventory & sourcing risks

Although the Group aims to have excellent relations with its suppliers, there is a risk of failure to

contract component suppliers at an acceptable purchase price, resulting in shortages of raw materials

or higher costs, which, in turn, may significantly affect the Group's capability to provide

competitively priced products and services to customers at the time they are wanted.

In addition, because actual demand may be less than the committed quantity, the risk exists that the

inventory levels are too high, resulting in obsolete inventory items and a financial loss for the

Group. The market price may decline to less than the production cost of the finished products in

inventory, resulting in a financial loss for the Group.

1.1.12 Credit risk

Credit risk encompasses all forms of counter-party exposure, i.e. where counter-parties may default

on their obligations to the Group in relation to lending, hedging and other financial activities.

The Group has policies in place to monitor and control counter-party credit risk. Zenitel mitigates its

exposure to counter-party credit risk through counter-party credit guidelines, diversification of

counter-parties, working with agreed counter-party limits through setting limits on the maturity of

financial assets. For major projects the intervention of credit insurance companies or similar

organizations is requested. The Group has no significant concentration of credit risk.

1.1.13 Force majeure risks

Events of an exceptional nature (such as a fire) or events on a larger scale (such as flooding,

earthquake or extreme weather conditions) may affect the Group itself and/or its component

suppliers. These kinds of events, which can also include terrorist attacks or disease epidemics

(human related force majeure risks), can destabilize part or all of the world’s economy.

Especially in the case of an R&D and/or a manufacturing site, those events may seriously affect the

Group’s competitive position, as they may disrupt deliveries to customers or postpone new product

releases.

1.1.14 Compliance and governmental regulations

In a company of the Group’s size and scope, an employee’s actions can result in a breach of laws

and regulations or company ethics. Any resulting criminal prosecution or fine can of course have a

negative effect on the Group’s image, business and share value. This risk is higher in emerging

markets, as the knowledge of local laws and regulations, or the monitoring of ethical standards, may

still be less developed than in more mature markets.

Compliance rules affect each employee in his or her daily work. Management exerts effort to

comply with legal and corporate policies and procedures and to strive together towards a truly

compliant organization based on the Group’s global compliance procedures. Although the Group has

put in place an internal audit organization, it cannot guarantee the full compliance of all of its

employees with internal and external regulations.

25

1.1.15 IT risks

The Group makes extensive use of IT systems and platforms to support its operations. As

configuration, hardware or software failures may occur, which can hamper these operations

procedures are in place to mitigate these risks.

If changes in IT technology cause the Group's information systems to become obsolete or if its

information systems are inadequate to handle its growth, the Group could lose customers and sales.

The Group is increasingly dependent on information systems to operate its websites, its e-commerce

platform, its intra- and extranet, to respond to inquiries, to manage inventory, accounting,

purchasing and sales applications and to maintain cost efficient operations. Any material disruption

or slowdown of the Group's systems including disruption or slow down caused by its failure to

successfully upgrade their systems, by system failures, by viruses, by attacks from computer hackers

or by other causes, could (i) have an impact on cash flow, and (ii) cause information to be lost or

delayed which in turn could result in delays in delivery of its products or in lost sales that could

negatively impact results.

1.1.16 Zenitel’s technology is not patented and can be imitated by its competitors

The IP rights in the technology and processes that are used to manufacture the Group's products are

often controlled by its suppliers and are generally not unique to the Group. Therefore its ability to

obtain IP protection for its products is limited. Currently the Group owns no patents or exclusive IP

rights in the technology or processes underlying its products. As a result the competitors may be able

to manufacture and sell products with characteristics and styling similar to the Group's products. If

they could do so at lower prices, the Group's revenue and profitability could suffer.

1.1.17 The operations of some of the Group's suppliers are subject to additional risks that are

beyond its control and that could harm its business

Some of the Group's suppliers are located outside Western Europe and manufacture the Group's

products in Eastern Europe (approx. 20%) and Asia (approx. 25%). As a result of these international

suppliers the Group is subject to risks associated with doing business abroad, including:

Political unrest, terrorism, labour disputes and economic instability resulting in the

disruption of trade from foreign countries in which the products are manufactured;

The imposition of new laws and regulations, including those related to labour conditions,

quality and safety standards, imports, duties and taxes, as well as trade restrictions and

restrictions on currency exchange or the transfer of funds;

Reduced protection for IP rights including trademark protection in some countries,

particularly in China;

Changes in local economic conditions in countries where the Group's manufacturers or

suppliers are located.

26

1.1.18 Risks relating to trading sanctions and embargoes could have a negative impact on the

Group’s results of operations

In the past few years the US, the EU and the UN have increased their imposition of various

sanctions and embargoes on trading with countries such as Iran, Syria, Sudan and others. Recently

similar sanctions are considered against Russia. As the activities and operations of the group are

worldwide, such sanctions and embargoes could have a negative impact on the Group’s business

results, cash flow and operations.

1.1.19 The Group is active in a limited number of niche markets.

Fluctuations of demand in one or more of these niche markets (as discussed in section 9.4 "Market

overview") such as for instance the number of ships build in the marine market, could have a

material effect on the Group’s business results, operations and financial condition.

1.1.20 The Group commercialises its products through a network of distributors worldwide

As the Group’s policy is to limit the number of distributors per geographical zone / country, a

distributor going out of business or switching to another provider, can negatively impact the Group’s

capability to continue doing business in that geographical zone / country, and as a consequence have

a negative impact on the business, results of operations, cash flow and financial condition of the

Group.

1.1.21 Project risks in the Wireless Systems activities

The Group is still active in the project business and faces risks inherent to such business:

miscalculation, performance and implementation risk.

1.1.22 Specific risks in Caribbean

The Tetra network business in Caribbean represents between 7.5% and 9.0% of revenues the last

three years (see also section 9.4 “Market overview”).

There exist technological alternatives for the Group's Tetra network (e.g. LTE (Long Term

Evolution)). Although the Group has a policy to renew the existing contracts before the contract end,

there is a risk that ending multi-year contracts will not be renewed or only for a short term period.

Additionally, the possibility exists that existing or new competitors will ask for and be granted a

licence to operate similar networks.

27

1.2 Risks relating to the Offering

1.2.1 The Group cannot guarantee that an active trading market will develop for the shares

The Group cannot guarantee the extent to which a liquid market for the New Shares will develop or

be sustained. If no liquid market develops for the (New) Shares, the price of the shares could be

adversely affected by this fact. Investors should moreover bear this point in mind when examining

the price at which Zenitel's shares are traded. The Issuer does not use the services of a liquidity

provider and does not plan to do so in the near future. Liquidity of the shares has been limited in the

past, since 01/01/2012 on average approximately 6,150 shares (i.e. 0.01% of free-float total out of

6,413,284 shares per 31 December 2013) were traded per trading day.

Depending on the number of Non-Statutory Preferential Subscription Rights exercised by other

Existing Shareholders, 3D NV’s increased stake following the execution of the Backstop

Commitment may reduce the liquidity of the shares of the Issuer.

1.2.2 The market price of the shares may fluctuate and decline below the Issue Price and

trading in the shares may be limited, which might lead to shareholders not being able to

sell their shares at a reasonable price.

The Issue Price of the New Shares at the time of the Offering may not be indicative of the market

price for the shares after the Offering has been completed.

The market price of the shares has experienced volatility in the recent past (volatility of 49.5% over

the period from 23 May 2013 until 22 May 2014), and may continue to fluctuate, depending upon

many factors beyond the Group’s control.

The market price of the shares may be significantly affected by, among others the following factors:

(i) the Group’s actual or anticipated operational results and dividend payments, (ii) the level of the

Group’s debt (iii) future issues of Shares, (iv) changes in, or the Group’s failure to meet, securities

analysts’ expectations, (v) changes in the operating results of the Group and (vi) general market

conditions and the factors listed above under section 1.1 “Risks relating to the Group’s business”.

The market price of the shares is also subject to fluctuations in response to the Offering and the

investor perception of the success and impact of the Offering. As a result of these or other factors,

the shares may trade at prices significantly below their market price and the net asset value of the

Group’s investments. The Group cannot assure that the market price of the shares will not decline.

28

The graph below shows the development of the closing share price of the Issuer's shares from 1

January 2012 until 2 June 2014. (see also Euronext website, www.euronext.com)

1.2.3 Future sale of a significant number of shares could have a material adverse effect on the

price of the shares

A future sale of a significant number of shares on the stock market, or the perception that such a sale

might occur, could cause the market price of the shares to decline.

The Group cannot predict the effect on the share price if the shareholders were to decide to sell their

shares.

The share price would drop considerably if the shareholders of the Group were to sell substantial

numbers of shares at the same time. Such sales could make it more difficult for the Group in the

future to issue or sell shares at a certain point in time and at a price that it finds appropriate.

3D NV has entered into a lock-up and standstill agreement on 10 June 2014 with the Issuer and the

Lead Manager starting as of the Listing Date and ending six (6) months after the Listing Date.

1.2.4 Dilution of Existing Shareholders not exercising their Non-Statutory Preferential

Subscription Right

To the extent that an Existing Shareholder does not exercise its Non-Statutory Preferential



shareholder held in the Issuer's share capital prior to the issuance of the New Shares will accordingly

be reduced.

The extent of such dilution in terms of voting rights will be 50% if the shareholder does not exercise

any Non-Statutory Preferential Subscription Rights. The theoretical financial dilution will be 9.1% if

the shareholder does not exercise any Non-Statutory Preferential Subscription Rights.

€0.0

€0.2

€0.4

€0.6

€0.8

€1.0

€1.2

http://www.euronext.com/

29

For an illustration of the dilution in terms of voting rights and theoretical financial dilution that an

Existing Shareholder would suffer if he/she does not exercise its Non-Statutory Preferential

Subscription Right, see section 3.6 “Impact of the Offering: dilution and major shareholding” and

section 5.19 “Dilution”.


Existing Shareholders, 3D NV’s participation and voting rights in the Issuer after the Offering might

exceed 50% following the execution of the Backstop Commitment. This might allow 3D NV to have

a majority in the general meeting of shareholders and, as a result, vote in favour of or against certain

decisions (see simulation in section 3.6 "Impact of the Offering: dilution and major shareholding"

and section 5.19 "Dilution").

1.2.5 Take-over Offers

Provisions of the articles of association of the Issuer, contracts entered into by the Issuer and

provisions of Belgian law may discourage takeover offers and may limit the price that investors

would be willing to pay for the shares.

2. INFORMATION AND CAUTIONARY STATEMENTS

2.1 Approval of the Prospectus

On 10 June 2014, the FSMA approved this English version of the Prospectus for the purpose of the

Offering in accordance with Article 23 of the Act of 16 June 2006.

This Prospectus has been prepared in accordance with chapter II of the Commission Regulation

(EC) No 809/2004 of 29 April 2004 implementing the Prospectus Directive, as amended by the

Commission regulations (EC) No 1787/2006, No 211/2007 and No 1289/2008 as well as the

Commission delegated regulations (EU) No 311/2012, No 486/2012, No 862/2012, No 621/2013

and 759/2013.

The FSMA’s approval does not imply any judgement on the merits or the quality of the Offering or

the Issuer.

The Prospectus has been prepared in English. A summary has been translated into Dutch and

French. The Issuer, Zenitel SA/NV, with registered office Z1 Research Park, 110, 1731 Zellik,

represented by its board of directors, assumes responsibility for the content of this Prospectus and

for the content of the English, Dutch and French versions of this summary, in accordance with

Article 31 of the Act of 16 June 2006. Investors may rely on the translations of the summary in the

context of their contractual relationships with the Issuer.

The Offering and the Prospectus have not been submitted for approval to any supervisory body or

governmental authority outside Belgium.

30

2.2 Person responsible for the Prospectus

The Issuer, Zenitel SA/NV, with registered office Z1 Research Park, 110, 1731 Zellik, represented

by its board of directors, assumes responsibility for the content of this Prospectus. The Issuer

declares that, having taken all reasonable care to ensure that such is the case, the information

contained in this Prospectus is, to the best of its knowledge, in accordance with the facts and

contains no omission likely to affect its importance.

2.3 No representation

Neither the Lead Manager, nor its affiliates or any person acting on its behalf make any

representation or warranty, express or implied, as to the accuracy or completeness of the information

in this Prospectus, and nothing in this Prospectus is, or shall be relied upon as, a promise or

representation by the Lead Manager and its advisors.

The Prospectus is intended to provide information to the Existing Shareholders in the context of and

for the sole purpose of evaluating a possible investment in the New Shares. It contains selected and

summarised information, does not express any commitment or acknowledgement or waiver and does

not create any right, expressed or implied, towards anyone other than a potential investor. It cannot

be used except in connection with the Offering. The content of this Prospectus is not to be construed

as an interpretation of the rights and obligations of the Issuer, of the market practices or of contracts

entered into by the Issuer.

The Lead Manager and its affiliates are acting exclusively for the Issuer and no one else in

connection with the Offering and will not be responsible to any other person for providing the

services offered to their client or for providing advice in relation to the Offering.

2.4 Notices to Existing Shareholders

In making an investment decision, Existing Shareholders must rely on their own examination of the

Issuer and the terms of the Offering, including the merits and risks involved as described in the

Prospectus. Existing Shareholders should rely only on the information contained in the Prospectus.

Neither the Issuer nor the Lead Manager has authorised any other person to provide Existing

Shareholders with different information. If anyone provides different or inconsistent information, it

should not be relied upon.

None of the information in this Prospectus should be considered as an investment, legal or tax

advice. Investors should consult their own counsel, accountant and other advisors for legal, tax,

business, financial and related advice regarding purchasing the New Shares. Neither the Issuer nor

the Lead Manager makes any representation to any offeree or purchaser regarding the legality of an

investment in the New Shares by such offeree or purchaser under applicable investment or similar

laws.

31

The information appearing in this Prospectus should be assumed to be accurate as of the date on the

front cover of this Prospectus only. In accordance with Article 34 of the Act of 16 June 2006, if a

significant new fact, material mistake or inaccuracy relating to the information included in the

Prospectus which is capable of affecting the assessment of the New Shares and which arises or is

noted between the time when the Prospectus is approved and the Closing Date of the Offering, or as

the case may be, prior to the start of the trading of the New Shares on the relevant market, the same

will be set out in a supplement to the Prospectus. Any supplement is subject to approval by the

FSMA, and must be made public, in the same manner as the Prospectus.

If a supplement to the Prospectus is published on or prior to the Closing Date, subscribers in the

Offering shall have the right to withdraw their subscriptions made prior to the publication of the

supplement, in accordance with Article 34, §3 of the Act of 16 June 2006. Such withdrawal must be

done within the time limits set forth in the supplement (which shall not be shorter than two business

days after publication of the supplement).

2.5 Certain restrictions on the Offering

2.5.1 General

The Offering is conducted as a public offering in Belgium of New Shares to be issued pursuant to a

capital increase with Non-Statutory Preferential Subscription Rights to Existing Shareholders of the

Issuer only. Neither the Offering nor the Prospectus (or any document thereof) have or will be

submitted for approval to any supervisory authority outside Belgium.

The Prospectus (or any document thereof) does not constitute an offer or invitation in any place in

which, or to any person to whom, it would not be lawful to make such an offer or invitation.

The distribution of the Prospectus (or any document thereof) and the offering, sale and delivery of

the New Shares in certain jurisdictions may be restricted by law. Therefore, no steps may be taken

that would constitute or result in a public offering of the New Shares outside Belgium. Accordingly,

the Prospectus (or any document thereof) may not be used for the purpose of an offer or solicitation

by anyone in any jurisdiction where such an offer or solicitation is not authorised or is unlawful.

Persons into whose possession the Prospectus (or any document thereof) comes are required by the

Issuer and the Lead Manager to inform themselves about and to observe any such restrictions.

Neither the Issuer nor the Lead Manager assumes any responsibility in respect thereof.

Investors must comply with all applicable laws and regulations in force in any jurisdiction in which

they purchase, offer or sell the New Shares or possess or distribute the Prospectus (or any document

thereof) and must obtain any consent, approval or permission required for the purchase, offer or sale

of the New Shares under the laws and regulations in force in any jurisdiction in which any purchase,

offer or sale is made.

32

2.5.2 Notice to Existing Shareholders in the United States

The New Shares have not been or will not be registered under the Securities Act or with any

securities regulatory authority of any state or other jurisdiction of the United States, and are subject

to U.S. tax requirements. The New Shares may not be offered, sold or delivered within the United

States or to, or for the account or benefit of, US persons as defined in Regulation S, except pursuant

to an exemption from, or in a transaction not subject to, the registration requirements of the

Securities Act. Accordingly, the New Shares are being offered and sold outside the United States to

non-US persons in accordance with Regulation S under the Securities Act. There will be no public

offering of the New Shares in the United States. In addition, until 40 days after commencement of

the Offering, an offer or sale of New Shares within the United States by a dealer whether or not

participating in the Offering may violate the registration requirements of the Securities Act.

2.5.3 Notice to Existing Shareholders in the European Economic Area

The Issuer has not authorized any offer to the public of New Shares in any Member State, other than

Belgium. With respect to each Relevant Member State other than Belgium, no action has been

undertaken or will be undertaken to make an offer to the public of New Shares requiring a

publication of a prospectus in that Relevant Member State. As a result, the New Shares may only be

offered in a Relevant Member State under the following exemptions of the Prospectus Directive, if

they have been implemented or have direct effect in that Member State:

i. to qualified investors as defined in the Prospectus Directive;

ii. to fewer than 150 natural or legal persons in aggregate (other than qualified

investors as defined in the Prospectus Directive); or

iii. in any other circumstances falling within Article 3(2) of the Prospectus Directive;

provided that no such offer of New Shares shall result in a requirement for the publication by the

Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this paragraph, the expression an ‘‘offer to the public’’ of New Shares in any

Relevant Member State means the communication in any form and by any means of sufficient

information on the terms of the Offering and the New Shares to be offered so as to enable an

investor to decide to purchase or subscribe to any such securities, as the same may be varied in that

Member State by any measure implementing the Prospectus Directive in that Member State and the

expression "Prospectus Directive" includes any relevant implementing measure in each Relevant

Member State.

2.5.4 Notice to Existing Shareholders in the United Kingdom

This Prospectus is being distributed only to and is directed solely at (i) persons outside the United

Kingdom, (ii) persons who have professional experience in matters relating to investments falling

within Article 19(5) of the Financial Services and Markets Act (Financial Promotion) Order 2005, as

amended (the ‘‘Order’’), (iii) persons who are high net worth entities falling within Article 49(2)(a)

to (d) of the Order or (iv) other persons to whom this Prospectus may otherwise lawfully be

communicated (all such persons together being referred to as ‘‘Relevant Persons’’).

33

Any investment or investment activity to which this Prospectus relates is available only to Relevant

Persons and will be engaged in only with Relevant Persons. Any person who is not a Relevant

Person should not act or rely on this Prospectus or any of its contents.

2.5.5 Notice to Existing Shareholders in Canada, Australia or Japan

This Prospectus does not constitute an offer to sell, or the solicitation of an offer to subscribe for or

buy, New Shares in Canada, Australia, or Japan and is not for distribution in or into any of these

countries.

2.6 Forward-looking statements

The Prospectus includes forward-looking statements. By their nature, forward-looking statements

are subject to inherent risks and uncertainties, both general and specific, and the predictions,

forecasts, projections and other forward-looking statements contained in the Prospectus could be

materially different from what actually occurs in the future.

In addition, the Prospectus contains estimates of growth in the markets in which the Issuer operates

that have been obtained from independent, third party studies and reports. These estimates assume

that certain events, trends and activities will occur. Although the Issuer believes that these estimates

are generally indicative of the matters reflected in those studies and reports, these estimates are also

subject to risks and uncertainties and investors are cautioned to read these estimates in conjunction

with the rest of the disclosure in the Prospectus, particularly section 1 “Risk Factors”.

Although the Issuer believes that its expectations with respect to forward-looking statements are

based on reasonable assumptions within the bounds of its knowledge of its business and operations

at the date of the Prospectus, Existing Shareholders are cautioned that a number of important factors

could cause actual results to differ materially from the plans, objectives, expectations, estimates and

intentions expressed in such forward-looking statements. Some of these factors are discussed in

section 1 “Risk Factors” and elsewhere in the Prospectus.

The forward-looking statements contained in the Prospectus speak only at the date of the Prospectus

or, if obtained from third party studies or reports, the date of the corresponding study or report and

are expressly qualified in their entirety by the cautionary statements included in the Prospectus.

Without prejudice to the Issuer’s obligations under Belgian law in relation to disclosure and ongoing

information, the Issuer does not undertake any obligation to update publicly or revise any forward-

looking statements, whether as a result of new information, future events or otherwise. In light of

these risks, uncertainties and assumptions, the forward-looking events discussed in the Prospectus

might not occur.

2.7 Rounding

Certain amounts that appear in the Prospectus have been subject to rounding adjustments.

Accordingly, figures shown as totals in certain tables may not be arithmetic aggregations of the

figures that precede them.

34

2.8 Industry and other statistical information

Unless otherwise mentioned in the Prospectus, industry data and market size/share data provided in

the Prospectus are derived from independent publications by leading organisations, from reports by

market research firms and from other independent sources or from the Issuer’s management own

estimates, believed by management to be reasonable. When information has been derived from third

parties, the Prospectus refers to such third parties.

The information provided by third parties has been accurately reproduced with their agreement and

as far as the Issuer is aware and able to ascertain from information published by that third party, no

facts have been omitted which would render the reproduced information inaccurate or misleading.

However, the Issuer and its advisors have not independently verified any of the abovementioned

information.

Certain market share information and other statements in the Prospectus regarding the industry and

the Issuer’s position relative to its competitors may not be based on published statistical data or

information obtained from independent third parties. Rather, such information and statements reflect

the Issuer’s best estimates based upon information obtained from trade and business organisations

and associations and other contacts within the industry. This information from the Issuer’s internal

estimates and surveys has not been verified by any independent sources.

Market information is subject to change and cannot always be verified with complete certainty due

to limits on the availability and reliability of primary data, the voluntary nature of the data gathering

process and other limitations and uncertainties inherent to any statistical survey of market

information. As a result, Existing Shareholders should be aware that market share, ranking and other

similar data in the Prospectus, and estimates and beliefs based on such data, may not be reliable.

2.9 Statutory auditor

BDO Bedrijfsrevisoren Burg. Ven. CVBA with registered office located at The Corporate Village,

Da Vincilaan 9 Bus E6, 1935 Zaventem, represented by Mrs Veerle Catry has been appointed as

statutory auditor of the Issuer on 29 April 2013 for a term ending immediately after the closing of

the annual shareholders’ meeting to be held in 2016.

The financial statements of the Issuer for the years ended on 31 December 2011, 31 December 2012

and 31 December 2013 were prepared in accordance with BE GAAP. They have been audited by the

Auditor, who delivered an unqualified opinion with an emphasis of matter paragraph.

The unqualified opinion with an emphasis of matter paragraph given by the Auditor with respect to

the financial statements of the Issuer for the year ended on 31 December 2013 shall be read as

follows:

"In our opinion, the financial statements give a true and fair view of the assets and liabilities and the

financial position of the company Zenitel NV as at 31 December 2013, as well as its results for the

year then ended, in accordance with the financial reporting framework applicable in Belgium.

35

Although the company has a long history of losses and pending litigations that might have an

adverse effect on the financial position and cash flows of the company, the financial statements are

prepared in going concern. This assumption is only justified to the extent that the company can

further rely on the financial support of the shareholders or other financial sources. Without

prejudice to the above unqualified opinion, we draw your attention to the Directors’ report in which

the Board of Directors, according to Belgian legal requirements, justifies the application of the

valuation rules in going concern. No adjustments were made with respect to valuation or

classification of balance sheet items that would be required in case the company discontinues its

activities."

The consolidated financial statements of the Issuer for the year ended on 31 December 2011, 31

December 2012 and 31 December 2013 were prepared in accordance with IFRS. They have been

audited by the Auditor, who delivered an unqualified opinion with an emphasis of matter paragraph.

The unqualified opinion with an emphasis of matter paragraph given by the Auditor for the year

ended on 31 December 2013 shall be read as follows:

"In our opinion, the consolidated financial statements of the company Zenitel NV as of 31 December

2013 give a true and fair view of the net assets and financial position of the group as at 31

December 2013, as well as its consolidated results and cash flows for the year then ended, in

accordance with International Financial Reporting Standards as adopted by the European Union.

In the past the company and its subsidiaries (jointly “the group”) has incurred significant losses

that fundamentally affected the financial position. Without modifying the above conclusion, we

would like to draw your attention to the going concern paragraph in the (consolidated) annual

report, in which the Board of Directors justifies the application of the valuation rules under the

going concern assumption. The assumption to continue as a going concern is only valid in the case

the group continues to have access to short and medium term financing. No adaptations have been

made to the consolidated financial information as to the valuation or the classification of certain

items in the statement of financial position which would be necessary if the group is no longer able

to continue its activities."

The intermediate declaration for the period ended 31 March 2014 and published on 25 April 2014

has not been reviewed by the Auditor of the Issuer.

2.10 Information incorporated by reference

The press releases and extracts listed below of the Issuer’s annual reports for the financial years

ended 31 December 2011, 31 December 2012 and 31 December 2013 have been incorporated by

reference in this Prospectus. The information so incorporated by reference herein, shall form an

integral part of the Prospectus, save that any statement contained in a document which is

incorporated by reference herein, shall be modified or superseded for the purpose of this Prospectus

to the extent that a statement contained in this Prospectus modifies or supersedes such earlier

statement (whether expressly, by implication or otherwise). Any statement so modified or

superseded shall not, except as so modified or superseded, constitute a part of this Prospectus.

36

The table below sets out the relevant pages of the Issuer’s annual reports for the financial years

ended 31 December 2011, 31 December 2012 and 31 December 2013 that are incorporated by

reference in this Prospectus:

Annual report for the financial year ended on 31 December 20112:

Report of the board of directors pp. 13-20

Consolidated financial statements pp. 36-39

Notes to consolidated financial statements pp. 55-80

Statutory auditor's report pp. 81-82





Statutory auditor's report pp. 80





Statutory auditor's report pp. 86

Any information not listed in the table above but included in the document incorporated by reference

is given for information purpose only.

The Issuer further confirms having received the approval from the Auditor to be incorporated by

reference the Auditor's report for the financial years ended on 31 December 2011, 31 December

2012 and 31 December 2013.

In addition, the following press releases are incorporated by reference:

27 February 2014: Press Release Results 2013

21 March 2014 Publication Annual Report 2013

25 April 2014: Press Release Trading Update Q1 2014

28 April 2014: Annual General Shareholders’ Meeting and Extraordinary Shareholders' Meeting

Copies of these documents incorporated by reference, together with the Prospectus, are available

free of charge at the registered office of the Issuer and on the Issuer's website (www.zenitel.com).

2 The page numbers refer to the English version of the Issuer's annual report. 3 The page numbers refer to the English version of the Issuer's annual report. 4 The page numbers refer to the English version of the Issuer's annual report.


37

2.11 Available information

2.11.1 Prospectus

The Prospectus, is available in English. A summary of the Prospectus has also been translated into

Dutch and French. The English version of the Prospectus and the documents incorporated by

reference therein as well as the translations in Dutch and French of the summary will be made

available to investors at no cost at the registered offices of the Issuer. The Prospectus will also be

made available to investors at no cost upon request to the Lead Manager at

[email protected] or at + 32 2 287 91 56.

Subject to certain conditions, the Prospectus as well as the translations in Dutch and French of

summary are also available on the internet at the following websites: www.zenitel.com or

www.degroof.be.

2.11.2 Issuer documents and other information

The Issuer must file its (amended and restated) articles of association and all other deeds that are to

be published in the Annexes of the Belgian Official Gazette with the Clerk's office of the

Commercial Court of Brussels, where they are available to the public. A copy of the most recently

restated articles of association (as amended for the last time on 28 April 2014) and the corporate

governance charter will also be available on the Issuer's website.

In accordance with Belgian law, the Issuer must also prepare annual and consolidated audited

financial statements. The annual and consolidated financial statements and the reports of the board

of directors and Auditor relating thereto are filed with the National Bank of Belgium, where they are

available to the public. Furthermore, as a company listed on a regulated market, the Issuer publishes

an annual financial report, a half-yearly financial report and interim management statements. A

summary of these documents is made publicly available to the Belgian financial press in the form of

a press release. Copies thereof are also available on the Issuer’s website.

The Issuer has to disclose price sensitive information, information about its shareholders’ structure,

and certain other information to the public. In accordance with the Royal Decree of 14 November

2007, such information and documentation is made available through press releases, the financial

press in Belgium, the Issuer’s website, the communication channels of Euronext Brussels or a

combination of these media.

The Issuer's website can be found at www.zenitel.com and the Issuer can be reached at +32 2 370 53

10 and at [email protected]. The Lead Manager's website can be found at

www.degroof.be and the Lead Manager can be reached at + 32 2 287 91 56.

mailto:[email protected]




38

3. ESSENTIAL INFORMATION

3.1 Selected financial information

CONSOLIDATED KEY FIGURES

THOUSANDS OF EUR 2013 2012 2011

Restated

FROM CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Revenue 67 403 64 706 62 977

Profit before tax 1 877 977 612

Profit for the year 1 761 883 549

FROM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Total assets 37 771 41 030 41 221

Shareholders' equity 6 884 7 845 5 862

of which share capital and reserves 20 301 42 202 40 940

of which retained earnings (13 417) (34 357) (35 078)

Working capital 2 473 1 238 2 171

Total financial debt (1) 9 365 9 907 11 475

Total provisions (2) 4 664 5 762 6 270

Cash and cash equivalents 3 901 4 975 4 294

FROM CONSOLIDATED STATEMENT OF CASH FLOWS

Net cash flows from operating activities 3 560 6 075 4 670

Net cash flows from investing activities (4 091) (3 942) (3 033)

Net cash flows from financing activities (1 713) (1 619) (2 221)

Net cash and cash equivalents at the end of the year (3) 640 2 885 2 371

ALTERNATIVE PERFORMANCE MEASURES

EBITDA (4) 4 770 4 679 4 313

Operating profit (EBIT) 3 115 2 221 1 501

RATIOS

Shareholders' equity ratio (5) 18.2% 19.1% 14.2%

Shareholders' equity ratio including off-balance debt(6) 14.5% 14.8% 11.4%

Net debt (7) / EBITDA 1.1 1.1 1.7

Net debt (7) and provisions (2) / EBITDA 2.1 2.3 3.1

Weighted average number of shares (in thousands)(8) 16 441 16 441 16 441

Shareholders' equity/share (EUR) 0.42 0.48 0.36

Profit for the year/share (EUR) 0.11 0.05 0.03

Return On Capital Employed (9) 30.2% 20.9% 13.2%

OTHER KEY FIGURES

Personnel 270 249 246

Off-balance debt (in thousands) (10) 9 685 11 686 10 048

(1) Total financial debt: long term and short term interest bearing loans and borrowings

(2) Total provisions: Retirement benefit obligations plus provisions (both current and non current)

(3) Net cash and cash equivalents : Total cash and cash equivalents minus used factoring facility minus bank overdraft

(4) EBITDA: earnings before interest & taxes, depreciation and amortization plus

write-offs on current assets

(5) Shareholders' equity ratio : Shareholders' equity / (shareholders' equity + liabilities)

(7) Net debt: Total financial debt minus cash and cash equivalents

(8) Weighted average number of shares : Total number of shares minus treasury shares

(9) Return On Capital Employed (ROCE) : EBIT / (tangible assets + intangible assets + working capital)

(10) Off-balance debt : Operating lease agreements relating to office premises, site rents, car lease and IT equipment.

(6) Shareholders' equity ratio including off-balance debt : Shareholders' equity / (shareholders' equity + liabilities + off-

balance debt).

39

In the past, the Group has incurred significant losses that fundamentally affected its financial

position (see also section 11.1 “Historical financial information”).

In the past three years revenue has increased by 7 % to € 67.4 million. As a result EBITDA has

increased by more than 10 percent of the same period of time. The operating profit of the Group

more than doubled from € 1.5 million to € 3.1 million and profit of the years more than tripled from

€ 0.5 million to € 1.8 million for the year ending 31 December 2013.

40

Total assets of the Group decreased by almost 10 percent from € 41.2 million in 2011 to € 37.8

million in 2013 mainly due to capital depreciations and currency rate differences.

As a result of higher revenue working capital requirements have increased by 14% between 2011

and 2013.

The Group’s net financial debt and provisions, resulting from past restructurings and litigations,

have been reduced since 2011 from € 13.5 million to € 10.1 million.

The total non-current liabilities decreased from € 9.8 million in 2011, € 7.2 million in 2012 to € 3.6

million in 2013. The decrease is the result of the loan and pension payments in 2011, 2012 and 2013.

The total long term and short term borrowings decreased from € 11.5 million in 2011 and € 9.9

million in 2012 further to € 9.4 million in 2013.

The short term provisions amounted to € 4.0 million in 2012 compared to € 3.7 million in 2011. In

2013 short term provisions decreased again to € 3.7 million.

The cash flow generated from operations amounted to € 3.6 million in 2013 compared to € 6.1

million in 2012 and € 4.7 million in 2011. The total net cash outflow from investment activities

amounted to € 4.1 million in 2013 against € 3.9 million in 2012 and € 3.0 million in 2011 mainly

due to higher investments in research and development.

In 2013, € 1.7 million borrowings were repaid against € 1.6 million in 2012 and € 2.2 million in

2011. The Group’s net cash and cash equivalents amounted to € 0.6 million in 2013 compared to €

2.9 million in 2012 and € 2.4 million in 2011.

The Group has some off-balance commitments regarding operating lease. The commitments were in

2013 € 9.7 million, in 2012 € 11.7 million and in 2011 € 10.0 million at year end. Lease payments

recognized in the income statement for 2013 amounted to € 2.7 million, in 2012 € 2.9 million and in

2011 € 2.8 million. Operating lease agreements relate to office premises, site rents, car lease and IT

equipment.

3.2 Working Capital Statement

On the date of this Prospectus, the Issuer is of the opinion that, taking into account its available cash

and equivalents, it has sufficient working capital to meet its present requirements and cover the

working capital needs for a period of at least 12 months as of the date of the Prospectus.

3.3 Capitalisation and indebtedness

The following table sets out the total capitalisation and indebtedness of the Issuer as at 31 March

2014 (unaudited) and 31 December 2011, 2012 and 2013 on a consolidated basis.

41

Total current and non-current borrowings decreased from €11.5 million in 2011 to € 9.4 million in

2013. The bank borrowings at 31 December 2011 and 31 December 2012 include a bond issued to

Ethias. Per 28 June 2013 Ethias notified the Issuer that it had transferred the Issuer's bond to 3D NV

at the same terms.

42

3D NV granted the Issuer a postponement of the down payment that was due in July 2013. Per 31

December 2013, the shareholders’ loan to 3D NV amounted to € 4.4 million.

Cash and cash equivalents slightly decreased from € 4.3 million in 2011 to € 3.9 million per 31

December 2013.

The decrease in total provisions from € 6.3 million in 2011 to € 4.7 million in 2013 is related to

payments from old restructuring and retirement obligations and the release of provisions for

litigations.

The movements in equity are coming from the profit for the years and the impact of the translations

differences from foreign currencies.

3.4 Reasons for the Offering and use of proceeds

The Offering is aimed at repaying existing Belgian bank debt and shareholders' loans to improve

bank relations. Following the Offering, the Group intends to re-negotiate terms and conditions with

financial institutions. The repayment of the current debt and shareholder loans will automatically

free up the existing pledges and rights currently held by the financial institutions. With no remaining

obligations to banks/financial institutions or shareholders, the Group will be in a position to

objectively compare its future financial partners on a like for like basis. In addition, the Offering will

provide the Issuer with sufficient resources for future internal and external growth. Over the last

years the Issuer focused on the repayment of its outstanding debts and only had limited resources to

invest in R&D. If, following the Offering, its debt and liquidity position is improved, the Issuer will

have more resources available to invest in technology, such as e.g. audio and video integration. The

Offering will also allow the Group to investigate external growth opportunities via acquisitions.

The Issuer will receive the proceeds from the sale of the New Shares, less certain expenses and the

fees associated with the underwriting of the Offering.

The gross proceeds from the Offer amount to €13,243,538. The net proceeds from the Offering are

estimated at €12,993,538.The costs related to the Offering have been estimated at €250,000 and

include, among other things, the fees due to FSMA and Euronext Brussels, the remuneration of the

Lead Manager and the legal advisors and other administrative costs.

Such proceeds are expected to be used:

to repay up to €6.0 million for all of its existing Belgian bank debt and shareholders' loans;

to finance up to €1.5 million capital expenditures, i.e. purchasing equipment, machines,

products and spare parts to secure an existing supply stream;

to use the estimated €5.5 million of remaining net proceeds of the Offering for internal and

external growth opportunities and for possible obligations relating to several legal and

arbitration proceedings, of which the outcome remains uncertain in terms of judgment,

timing and amounts.

43

3.5 Interest of natural and legal persons involved in the Offering

Eugeen Beckers (permanent representative of Beckers Consulting BVBA) (director and chairman)

holds 103,421 shares of the Issuer (0.62% of the share capital) and Kenneth Dåstøl (director and

CEO) holds 60,388 shares of the Issuer (0.36% of the share capital) and will participate in the

Offering through the exercise of their Non-Statutory Preferential Subscription Rights.

All New Shares not subscribed by Existing Shareholders through their Non-Statutory Preferential

Subscription Right will be subscribed by 3D NV, which has unconditionally committed itself (i) to

subscribe all New Shares through its Non-Statutory Preferential Subscription Rights and (ii) to

subscribe all New Shares not subscribed by Existing Shareholders through their Non-Statutory

Preferential Subscription Rights at the Issue Price (the "Backstop Commitment").

3D holds 5,546,875 shares or 33.51% of the total voting rights. 3D NV also acts in concert with De

Wilg GCV and De Wilg GCV has indicated in its last transparency declaration that it holds

2,000,000 shares. Consequently, together 3D NV and De Wilg GCV hold 7,546,875 shares of the

Issuer or 45.59% of the total voting rights.

Part of the proceeds of the Offering are to be used to repay the shareholders' loans to 3D NV (see

section 3.4 "Reasons for the Offering and use of proceeds").

3D NV is the landlord of the building in which the Issuer has its offices in Zellik (Belgium). The

rent charged by 3D NV to the Issuer is determined on an at arms’ length basis and amounts to

€64,000 per year.

3.6 Impact of the Offering: dilution and major shareholding

The table below provides a simulation of the dilution for a hypothetical shareholder who owns

10,000 shares of the Issuer under different assumption regarding the part of Non-Statutory

Preferential Subscription Rights he/she wishes to exercise.

The column “Theoretical financial dilution” shows the theoretical financial dilution percentages for

Existing Shareholders, in function of different assumptions of their degree of participation in the

capital increase. This theoretical financial dilution results from the fact that the Non-Statutory Pref-

erential Subscription Rights will be without value if not exercised. It is calculated as the difference

between the 30-day average stock price and the TERP (Theoretical Ex Rights Price), divided by the

30-day average stock price.

(

)




44




To the extent that an Existing Shareholder does not exercise its Non-Statutory Preferential



shareholder held in the Issuer's share capital prior to the issuance of the New Shares will accordingly

be reduced. The extent of such dilution in terms of voting rights will be 50% if the shareholder does

not exercise any Non-Statutory Preferential Subscription Rights. The theoretical financial dilution

will be 9.1% if the shareholder does not exercise any Non-Statutory Preferential Subscription

Rights.


Shareholders exercise their Non-Statutory Preferential Subscription Rights and can be summarised

as follows:

Depending on the number of Non-Statutory Preferential Subscription Rights exercised by the

Existing Shareholders, their respective participation and voting rights in the Issuer will vary.


Existing Shareholders, 3D NV’s participation and voting rights in the Issuer after the Offering might

exceed 50% following the execution of the Backstop Commitment.

3D NV² 5,546,875 33.51% 11,206,863 33.85% 16,654,080 50.30% 22,101,297 66.75%

De Wilg GCV² 2,000,000 12.08% 4,000,000 12.08% 3,000,000 9.06% 2,000,000 6.04%


QuaeroQ CVBA 2,481,150 14.99% 4,962,300 14.99% 3,721,725 11.24% 2,481,150 7.49%

Freefloat 6,413,284 38.74% 12,826,568 38.74% 9,619,926 29.06% 6,413,284 19.37%

Total 16,554,422 100.00% 33,108,844 100.00% 33,108,844 100.00% 33,108,844 100.00%





of their rights1





increase




45

4. INFORMATION CONCERNING THE NEW SHARES

4.1 Type, class and dividend entitlement

All New Shares will be issued as ordinary shares that represent capital (in €) of the same category,

freely tradable, with voting rights, without nominal value. All New Shares will have the same rights

as the existing shares of the Issuer.

All shares participate in equal amounts in the profit of the Issuer (if any).

The New Shares will participate in the results of the entire financial year that begins on 1 January

2014 and every subsequent financial year.

The New Shares will be traded under the same ISIN code as the existing shares, which are assigned

the code ISIN BE0003806230 and shall have as symbol "ZENT".

4.2 Applicable law and jurisdiction

The New Shares will be issued in accordance with Belgian law and the Offering is governed by

Belgian law.

The Courts of Brussels (Belgium) are competent to hear all disputes in relation to the shares.

4.3 Form and transferability of the New Shares

The New Shares are registered or dematerialised, depending on the preference of the shareholder.

The investors are requested to indicate whether they want to receive the New Shares to which they

are subscribing (i) in dematerialised form or (ii) in registered form.

For the shareholders who choose dematerialised New Shares, the New Shares will be deposited on

issue through Euroclear Belgium on the securities account of the shareholder. The number of

dematerialised shares in circulation at any given time will be registered in the related register of

shares in the name of the settlement agency.

For the shareholders who choose registered New Shares, the New Shares will be registered in the

register of shareholders of the Issuer on issue.

Every shareholder may request conversion of his shares, at own cost, either into registered shares, or

into dematerialised shares.

46

4.4 Currency of the issue

The issue takes place in Euro.

4.5 Rights attached to the New Shares

The New Shares will be issued with the same rights attached to the existing shares of the Issuer as

described in section 7.2 "Rights attached to the shares".

4.6 Taxation in Belgium

The paragraphs below present a summary of certain material Belgian income tax consequences of

the ownership and disposal of Issuer's shares (including the New Shares). The summary is based on

laws, treaties and regulatory interpretations in effect in Belgium on the date of this Prospectus, all

of which are subject to change, including changes that could have retroactive effect. This summary

does not purport to address all tax consequences of the ownership and disposal of the New Shares,

and does not take into account the specific circumstances of particular investors, some of which may

be subject to special rules, or the tax laws of any country other than Belgium.

For purposes of this summary, a Belgian resident is (i) a Belgian resident individual, being an

individual subject to Belgian personal income tax (that is, an individual who is domiciled in Belgium

or has his seat of wealth in Belgium or a person assimilated to a resident for purposes of Belgian tax

law), (ii) a Belgian resident company, being a company (as defined under Belgian tax law) subject

to Belgian corporate income tax (that is, a corporate entity that has its statutory seat, its main

establishment, its administrative seat or seat of management in Belgium), (iii) an Organization for

Financing Pensions subject to Belgian corporate income tax (i.e., a Belgian pension fund

incorporated under the form of an Organization for Financing Pensions), or (iv) a Belgian resident

legal entity, being a legal entity (as defined under Belgian tax law) subject to Belgian income tax on

legal entities (that is, a legal entity other than a company subject to Belgian corporate income tax,

that has its statutory seat, its main establishment, its administrative seat or seat of management in

Belgium). A Belgian non-resident is any person that is not a Belgian resident.

Investors should consult their own advisors regarding the tax consequences of an investment in the

New Shares in the light of their particular circumstances, including the effect of any state, local or

other national laws.

4.6.1 Belgian Withholding Tax

For Belgian income tax purposes, the gross amount of all benefits paid on or attributed to the Issuer's

shares is generally treated as a dividend distribution. By way of exception, the repayment of capital

carried out in accordance with the BCC is not treated as a dividend distribution to the extent that

such repayment is imputed to fiscal capital. In principle, fiscal capital includes the paid-up statutory

capital, paid-up issue premiums and the amounts subscribed to at the time of the issue of profit-

sharing certificates, if treated in the same way as capital according to the articles of association of

the Issuer.

Belgian withholding tax of 25% is normally levied on dividends, subject to such relief as may be

available under applicable domestic or tax treaty provisions.

47

In case of a redemption of the Issuer’s shares, the redemption distribution (after deduction of the part

of the fiscal capital represented by the redeemed shares) will be treated as a dividend subject to a

Belgian withholding tax of 25%, subject to such relief as may be available under applicable

domestic or tax treaty provisions. No withholding tax will be triggered if this redemption is carried

out on a stock exchange and meets certain conditions.

In case of liquidation of the Issuer, any amounts distributed in excess of the fiscal capital will in

principle be subject to the 10% withholding tax, subject to such relief as may be available under

applicable domestic provisions. It is to be noted, however, that such 10% withholding tax rate will

be increased to 25% as of October 1st, 2014.

Dividends distributed to a Belgian resident company will be exempt from Belgian withholding tax

provided that the Belgian resident company holds, upon payment or attribution of the dividends, at

least 10% of the Issuer’s share capital and such minimum participation is held or will be held during

an uninterrupted period of at least one year. In order to benefit from this exemption, the investor

must provide the Issuer or its paying agent with a certificate confirming its qualifying status and the

fact that it meets the two required conditions. If the investor holds a minimum participation for less

than one year, at the time the dividends are paid on or attributed, the Issuer will levy the withholding

tax but will not transfer it to the Belgian Treasury provided that the investor certifies its qualifying

status, the date from which the investor has held such minimum participation, and the investor’s

commitment to hold the minimum participation for an uninterrupted period of at least one year. The

investor must also inform the Issuer or its paying agent if the one-year period has expired or if its

shareholding will drop below 10% of the Issuer’s share capital before the end of the one-year

holding period. Upon satisfying the one-year shareholding requirement, the levied dividend

withholding tax will be refunded to the investor.

Dividends distributed to non-resident companies established in a Member State of the EU or in a

country with which Belgium has concluded a double tax treaty that includes a qualifying exchange

of information clause and qualifying as a parent company, will be exempt from Belgian withholding

tax provided that the Issuer’s shares held by the non-resident company, upon payment or attribution

of the dividends, amount to at least 10% of the Issuer’s share capital and such minimum

participation is held or will be held during an uninterrupted period of at least one year. A company

qualifies as a parent company provided that (i) for companies established in a Member State of the

EU, it has a legal form as listed in the annex to the EU Parent-Subsidiary Directive of July 23, 1990

(90/435/EC), as amended from time to time, or, for companies established in a country with which

Belgium has concluded a qualifying double tax treaty it has a legal form similar to the ones listed in

such annex; (ii) it is considered to be a tax resident according to the tax laws of the country where it

is established and the double tax treaties concluded between such country and third countries; and

(iii) it is subject to corporate income tax or a similar tax without benefiting from a tax regime that

derogates from the ordinary tax regime.

48

In order to benefit from this exemption, the investor must provide the Issuer or its paying agent with

a certificate confirming its qualifying status and the fact that it meets the three abovementioned

conditions. If the investor holds a minimum participation for less than one year, at the time the

dividends are paid on or attributed, the Issuer will levy the withholding tax but will not transfer it to

the Belgian Treasury provided that the investor certifies its qualifying status, the date from which

the investor has held such minimum participation, and the investor’s commitment to hold the

minimum participation for an uninterrupted period of at least one year. The investor must also

inform the Issuer or its paying agent if the one-year period has expired or if its shareholding will

drop below 10% of the Issuer’s share capital before the end of the one-year holding period. Upon

satisfying the one-year shareholding requirement, the levied dividend withholding tax will be

refunded to the investor.

Under Belgian tax law, withholding tax is not due on dividends paid to a foreign pension fund

subject to certain conditions.

Belgium has concluded tax treaties with over 95 countries, reducing the dividend withholding tax

rate to 20%, 15%, 10%, 5% or 0% for residents of those countries, depending on conditions, among

others, related to the size of the shareholding and certain identification formalities.

Prospective holders should consult their own tax advisors as to whether they qualify for reduction in

withholding tax upon payment or attribution of dividends, and as to the procedural requirements for

obtaining a reduced withholding tax upon the payment of dividends or for making claims for

reimbursement.

4.6.2 Belgian Income Tax

a. Belgian resident individuals

As far as dividends is concerned, for Belgian resident individuals who acquire and hold the Issuer’s

shares as a private investment, the Belgian dividend withholding tax fully discharges their personal

income tax liability. They may nevertheless elect to report the dividends in their personal income tax

return. Where the beneficiary opts to report them, dividends will normally be taxable at the lower of

the generally applicable 25% withholding tax rate on dividends or at the progressive personal

income tax rates applicable to the taxpayer’s overall declared income. If the beneficiary reports the

dividends, the income tax due on such dividends will not be increased by local surcharges. In

addition, if the dividends are reported, the dividend withholding tax levied at source may be credited

against the personal income tax due and is reimbursable to the extent that it exceeds the personal

income tax due, provided that the dividend distribution does not result in a reduction in value of or a

capital loss on the Issuer’s shares. This condition is not applicable if the individual can demonstrate

that he has held the Issuer’s shares in full legal ownership for an uninterrupted period of 12 months

prior to the payment or attribution of the dividends.

49

For Belgian resident individuals who acquire and hold the Issuer’s shares for professional purposes,

the Belgian withholding tax does not fully discharge their income tax liability. Dividends received

must be reported by the investor and will, in such a case, be taxable at the investor’s personal

income tax rate increased with local surcharges. Withholding tax levied at source may be credited

against the personal income tax due and is reimbursable to the extent that it exceeds the income tax

due, subject to two conditions: (i) the taxpayer must own the Issuer’s shares in full legal ownership

at the time the dividends are paid or attributed and (ii) the dividend distribution may not result in a

reduction in value of or a capital loss on the Issuer’s shares. The latter condition is not applicable if

the investor can demonstrate that he has held the full legal ownership of the Issuer’s shares for an

uninterrupted period of 12 months prior to the payment or attribution of the dividends.

As far as capital gains on the disposal of Issuer's shares are concerned, in principle, Belgian resident

individuals acquiring and holding the Issuer’s shares as a private investment should not be subject to

Belgian capital gains tax. However, capital gains realized by a private individual are taxable at 33%

(plus local surcharges) if the capital gain is deemed to be realized outside the scope of the normal

wealth management of a private estate. Moreover, capital gains realised by Belgian resident

individuals on the disposal of the Issuer’s shares for consideration, outside the exercise of a

professional activity, to a non-resident company (or a body constituted in a similar legal form), to a

foreign state (or one of its political subdivisions or local authorities) or to a non-resident legal entity,

are in principle taxable at a rate of 16.5% (plus local surcharges) if, at any time during the five years

preceding the sale, the Belgian resident individual has owned directly or indirectly, alone or with

his/her spouse or with certain relatives, a substantial shareholding in the Issuer (i.e., a shareholding

of more than 25% in the Issuer). This capital gains tax does not apply if the New Shares are

transferred to the above mentioned persons provided that they are established in the European

Economic Area. Capital losses on such transactions are, however, not tax deductible.

Capital gains realized by Belgian resident individuals upon the redemption of the Issuer’s shares or

upon the liquidation of the Issuer will generally be taxable as a dividend.

Belgian resident individuals who hold the Issuer’s shares for professional purposes are taxable at the

ordinary progressive personal income tax rates (plus local surcharges) on any capital gains realized

upon the disposal of the Issuer’s shares, except for the Issuer’s shares held for more than five years,

which are taxable at a separate rate of 16.5% (plus local surcharges). Capital losses on the Issuer’s

shares incurred by Belgian resident individuals who hold the Issuer’s shares for professional

purposes are in principle tax deductible.

b. Belgian resident companies

As far as dividends is concerned, Belgian resident companies must in principle declare the gross

dividend income (including the withholding tax) in the corporate income tax return and such amount

will be subject to a corporate income tax rate of 33.99%. In certain circumstances, reduced corporate

income tax rates may apply.

50

However, Belgian resident companies can generally (although subject to certain limitations) deduct

up to 95% of the gross dividend received from the taxable income (the “dividend received

deduction”), provided that at the time of a dividend payment or attribution: (i) the Belgian resident

company holds the Issuer’s shares representing at least 10% of the share capital of the Issuer or a

participation in the Issuer with an acquisition value of at least €2,500,000; (ii) the Issuer’s shares

have been held or will be held in full ownership for an uninterrupted period of at least one year; and

(iii) the conditions relating to the taxation of the underlying distributed income, as described in

Article 203 of the Belgian Income Tax Code (the “BITC”) are met (together, the “Conditions for

the application of the dividend received deduction regime”). The Conditions for the application

of the dividend received deduction regime depend on a factual analysis and for this reason the

availability of this regime should be verified upon each dividend distribution.

Any Belgian dividend withholding tax levied at source may be credited against the corporate income

tax due and is reimbursable to the extent that it exceeds the corporate income tax due, subject to two

conditions: (i) the taxpayer must own the Issuer’s shares in full legal ownership at the time the

dividends are paid or attributed and (ii) the dividend distribution may not result in a reduction in

value of or a capital loss on the Issuer’s shares. The latter condition is not applicable: (i) if the

company can demonstrate that it has held the Issuer’s shares in full legal ownership for an

uninterrupted period of 12 months prior to the payment of or attribution on the dividends or (ii) if,

during that period, the Issuer’s shares never belonged to a taxpayer other than a resident company or

a non-resident company which has, in an uninterrupted manner, invested the Issuer’s shares in a

permanent establishment in Belgium.

As far as capital gains on the disposal of Issuer's shares are concerned, Belgian resident companies

(not being Small and Medium sized Enterprises within the meaning of Article 15 BCC, hereinafter

referred to as “SMEs”) are subject to Belgian capital gains taxation at a separate rate of 0.412% on

such gains realized provided that: (i) the Article 203 ITC Taxation Condition is met and (ii) the

Issuer’s shares have been held in full legal ownership for an uninterrupted period of at least one

year. The 0.412% separate capital gains tax rate cannot be off-set by any tax assets (such as e.g. tax

losses) and can moreover not be off-set by any tax credits. Belgian resident companies qualifying as

SMEs are normally not subject to Belgian capital gains taxation on gains realized upon the disposal

of the Issuer’s shares provided that (i) the Article 203 ITC Taxation Condition is met and (ii) the

Issuer’s shares have been held in full legal ownership for an uninterrupted period of at least one

year. If the one-year minimum holding period condition referred to above would not be met (but the

Article 203 ITC Taxation Condition is met) then the capital gains realized upon the disposal of the

Issuer’s shares by Belgian resident companies (both non-SMEs and SMEs) are taxable at a separate

corporate income tax rate of 25.75%.

Capital losses on the Issuer’s shares incurred by resident companies (both non-SMEs and SMEs) are

as a general rule not tax deductible.

Capital gains realized by Belgian resident Companies upon the redemption of the Issuer’s shares or

upon the liquidation of the Issuer will in principle be taxed as dividends.

51

c. Belgian legal entities

For Belgian legal entities, the Belgian dividend withholding tax fully discharges their income tax

liability. Capital gains realised with respect to the Issuer's shares are as a rule not subject to income

tax, safe in case of a sale of shares which are directly or indirectly part of a stake representing more

than 25% of the share capital in the Issuer which may, under certain conditions, give rise to a 16.5%

tax (plus local surcharges).

Capital losses on the Issuer’s shares incurred by Belgian resident legal entities are not tax

deductible.

Capital gains realized by Belgian resident legal entities upon the redemption of the Issuer’s shares or

upon the liquidation of the Issuer will in principle be taxed as dividends.

d. Non-resident persons

For non-residents, the dividend withholding tax (if any) will be the only tax on dividends in

Belgium, unless the non-resident holds the Issuer’s shares in connection with a business conducted

in Belgium through a fixed base in Belgium or a permanent establishment in Belgium.

If the Issuer’s shares are acquired or held by a non-resident in connection with a business conducted

in Belgium through a fixed base in Belgium or a permanent establishment in Belgium, the investor

must report any dividends received in a tax return, which will be taxable at the applicable non-

resident individual or corporate income tax rate, as appropriate. Withholding tax levied at source

may then be credited against non-resident individual or corporate income tax and is reimbursable to

the extent that it exceeds the income tax due, subject to two conditions: (i) the taxpayer must own

the Issuer’s shares in full legal ownership at the time the dividends are paid or attributed and (ii) the

dividend distribution may not result in a reduction in value of or a capital loss on the Issuer’s shares.

The latter condition is not applicable if (i) the non-resident individual or the non-resident company

can demonstrate that the Issuer’s shares were held in full legal ownership for an uninterrupted period

of 12 months prior to the payment or attribution of the dividends or (ii) with regard to non-resident

companies only, if, during the said period, the Issuer’s shares have not belonged to a taxpayer other

than a resident company or a non-resident company which has, in an uninterrupted manner, invested

the Issuer’s shares in a permanent establishment in Belgium.

Non-resident companies whose Issuer’s shares are invested in a permanent establishment may

deduct up to 95% of the gross dividends included in their taxable profits if, at the date dividends are

paid or attributed, the Conditions for the application of the dividend received deduction regime are

met. Application of the dividend received deduction regime depends, however, on a factual analysis

to be made upon each distribution and its availability should be verified upon each distribution.

52

e. Organisations for Financing Pensions

For organizations for financing pensions (“OFPs”), i.e., Belgian pension funds incorporated under

the form of an OFP (organismes de financement de pensions/organizmen voor de financiering van

pensioenen) within the meaning of Article 8 of the Belgian Law of October 27, 2006, the dividend

income is generally tax-exempt. In principle, any Belgian withholding tax paid is creditable against

corporate income tax due and any excess is as a rule refundable.

Capital gains realised by OFPs are generally tax exempt and capital losses are not deductible.

4.6.3 Stamp Duties

No stamp duties are due upon subscription to New Shares (primary market transactions). Secondary

market trades in respect of the New Shares will give rise to a stamp duty on stock exchange

transactions of 0.25% (due on each sale and acquisition separately) if they are carried out in Belgium

through a professional intermediary. The amount of the stamp duty is, however, capped at €740 per

transaction per party. This rate and this cap will normally reduce to 0.22% and €650, respectively,

for transactions occurring as from 1 January 2015.

In any event, no tax on stock exchange transactions is payable by (i) professional intermediaries

referred to in Articles 2, 9° and 10° of the Law of 2 August 2002 on the supervision of the financial

sector and financial services, acting for their own account; (ii) insurance companies referred to in

Article 2, §1 of the Insurance Supervision Act of 9 July 1975 acting for their own account, (iii)

institutions for occupational retirement provision funds referred to in Article 2, 1° of the Law of 27

October 2007 on the supervision of institutions for occupational retirement provision; (iv) collective

investment undertakings; or (v) non-residents (upon delivery of a certificate of non-residency in

Belgium).

4.6.4 The proposed financial transactions tax ("FTT")

The European Commission recently published a proposal for a Directive for a common financial

transaction tax in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal,

Slovenia and Slovakia.

The proposed FTT has very broad, potentially extraterritorial scope. It would apply to financial

transactions where at least one party is a financial institution, and (a) one party is established in a

participating Member State or (b) the financial instrument which is subject to the transaction is

issued in a participating Member State. A financial institution may be, or be deemed to be,

"established" in a Member State in a broad range of circumstances.

In relation to many secondary market transactions in bonds and shares, the FTT would be charged at

a minimum rate of 0.1% on each financial institution which is party to the transaction. The issuance

and subscription of bonds or shares should, however, be exempt. There are no broad exemptions for

financial intermediaries or market makers. Therefore, the effective cumulative rate applicable to

some dealings in bonds or shares (for instance, cleared transactions) could be greatly in excess of

0.1%.

53

A person transacting with a financial institution which fails to account for FTT would be jointly and

severally liable for that tax.

The FTT proposal remains subject to negotiation between the Member States, and may therefore be

altered. Additional Member States may decide to participate. Prospective holders of New Shares are

strongly advised to seek their own professional advice in relation to the FTT. If the FTT were to be

adopted in Belgium, it is highly likely that the stamp duty on stock exchange transactions will be

abolished.

54

5. INFORMATION ON THE OFFERING

5.1 Decision of the Issuer

The extraordinary general meeting held on 28 April 2014 resolved inter alia to authorise the board of

directors to increase the share capital of the Issuer with a maximum amount of €10,000,000.00,

being the amount of the present share capital, and to issue warrants and convertible bonds, pursuant

to Article 603 and 604 of the BCC. The general meeting of shareholders moreover decided to

authorize the board of directors to limit or exclude in the framework of the aforementioned

transactions, the preferential subscription rights of the shareholders, also for the benefit of one or

more determined persons, other than members of the personnel of the Issuer or its subsidiaries, as

well as to grant the authorization to increase the share capital by means of a conversion of reserves.

Moreover, the general meeting of shareholders decided to authorize the board of directors to proceed

to a capital increase in case of a notification of a public takeover on the securities of the Issuer,

pursuant to Article 607 of the BCC.

To this end, the general meeting of shareholders decided to replace Article 7 of the articles of

association with respect to the authorized capital as set forth in more detail in section 7.2.5

"Modification of the share capital".

Pursuant to the above authorisations, the board of directors at its meeting held on 10 June 2014

resolved to approve an increase of the share capital by contributions in cash by an aggregate amount

of up to €10,000,000, plus a share premium of up to €3,243,538, so as to bring it from its current

amount of €10,000,000 represented by 16,554,422 existing shares of the Issuer to up to €20,000,000

represented by 33,108,844 shares of the Issuer by the issuance of up to 16,554,422 New Shares,

offered by preference to the Existing Shareholders pursuant to the Non-Statutory Preferential

Subscription Rights. These Non-Statutory Preferential Subscription Rights will be represented by

coupon No. 3 attached to the existing shares of the Issuer, the Non-Statutory Preferential

Subscription Rights will neither be listed on any stock exchange or otherwise tradable or

transferrable5 nor will they be the subject of an offer or private placement. The Offering is addressed

to the Existing Shareholders who should be aware that the Offering is not structured as a typical

rights issue whereby the preferential subscription rights are tradable and transferable and whereby

the non-exercised preferential subscription rights are sold as scrips to institutional investors.

Consequently, in the Offering after the Subscription Period the non-exercised Non-Statutory

Preferential Subscription Rights shall automatically no longer exist and therefore be without value.

No consideration shall be offered to holders of non-exercised Non-Statutory Preferential

Subscription Rights. The Existing Shareholders who do not or only partly exercise their Non-

Statutory Preferential Subscription Rights might therefore suffer a (financial) dilution. Investors are

requested to carefully read section 1.2.4 “Dilution of Existing Shareholders not exercising their Non-

Statutory Preferential Subscription Right”.

The board of directors applied the procedure provided for by Article 596 of the BCC with a view to

exclude the preferential subscription rights of the Existing Shareholders. In addition, the procedure

provided for by Article 524 of the BCC has been applied with respect to the unilateral undertaking

by 3D NV (for more detail see section 8.11.2 "Transactions with affiliated parties").

5 It being understood that for the purposes of the Offering and the subscription to the New Shares by the Existing Shareholders and/or 3D

NV, the Non-Statutory Preferential Subscription Rights shall be transferable between the Lead Manager, banks, other financial

institutions, Euroclear Belgium, Euroclear, other clearing institutions or recognized account holders (vereffeningsinstellingen en erkende

rekeninghouders) and their participants and shall for these purposes be fungible.

55

The board of directors also determined the Issue Price, the effective number of New Shares to be

offered, the Subscription ratio, and the Subscription Period. The Issuer expects that the New Shares

will be issued on 24 June 2014.

5.2 Maximum amount of the Offer

The total amount of the capital increase together with any share premium will be €13,243,538. As

described in section 5.9.2 "Backstop Commitment", the Backstop Commitment provided by 3D NV

guarantees the capital increase.

5.3 Terms of subscription

Subject to restrictions under applicable securities laws, the Existing Shareholders through the

exercise of their Non-Statutory Preferential Subscription Rights can subscribe to the New Shares in

an irreducible way in accordance with the Subscription ratio of one (1) New Share for one (1) Non-

Statutory Preferential Subscription Right held in possession.

5.4 Withdrawal and suspension of the Offer

The Issuer has the right to withdraw from or suspend the Offering if an event occurs which enables

the Lead Manager to terminate the Underwriting Agreement. The Lead Manager may decide to

terminate the Underwriting Agreement where:

(a) (i) any statement contained in any offering documents is, or has become, or has been

discovered to be, incorrect or misleading in any material respect, (ii) any matter has arisen

which would, if the offering documents were to be issued at that time, constitute a material

inaccuracy or omission therefrom;

(b) any matter has arisen which would require under Belgian law the publication of an

additional public disclosure (including a supplement or amendment to the Prospectus);

(c) there has been a material breach by Zenitel of any of the representations or warranties

contained in this agreement;

(d) Zenitel has not complied in all material respect with the covenants and undertakings set out

in this agreement;

(e) there shall have been a material adverse effect since the date of this agreement (whether or

not foreseeable at the date of this agreement);

(f) without prejudice to any other sub clause of this clause 11, any of the conditions specified in

clause 10 has not been satisfied or has not been waived by the Lead Manager, such waiver

not to be unreasonably withheld;

(g) there having occurred a (i) specified event; or (ii) the application for listing is withdrawn or

refused by NYSE Euronext Brussels; or

(h) on the Closing Date, Zenitel fails to issue the number of New Shares that it is obliged to

issue hereunder, provided this is due to Zenitel.

5.5 Reduction of the subscription

It will not be possible to reduce the subscription during the Subscription Period. Hence, no

procedure to refund any excess amounts paid by subscribers needs to be organised.

56

5.6 Revocation of subscription orders

The Issuer will update the information provided in this Prospectus by means of a supplement hereto

if a significant new factor that may affect the evaluation by an Existing Shareholder of the Offering

occurs prior to the Closing Date of the Offering. Any prospectus supplement will be subject to

approval by the FSMA and will be published in the Belgian financial press.

If a supplement to the Prospectus is published on or prior to the Closing Date of the Subscription

Period, subscribers in the Offering shall have the right to withdraw their subscriptions made prior to

the publication of the supplement (Article 34, §3 of the Act of 16 June 2006).

Such withdrawal must be done within the time limits set forth in the supplement (which shall not be

shorter than two business days after publication of the supplement). If however a supplement to the

Prospectus is published in relation to the termination of the Underwriting Agreement, subscriptions

in the Offering will automatically be withdrawn.

5.7 Payment for and delivery of the New Shares

The payment of the subscriptions is expected to take place on or around 24 June 2014 and will be

done by debit of the subscriber’s account with the same value date.

Delivery of the New Shares in dematerialised form issued on or around 24 June 2014 will take place

on the date of issue as applicable through the book-entry system of Euroclear Belgium.

Delivery of the New Shares in registered form issued on or around 24 June 2014 will take place on

the date of issue as applicable through the entry in the Issuer's shareholders' register.

5.8 Publication of the results of the Offering

The results of the Offering will be published in the Belgian financial press on or around 20 June

2014.

5.9 Procedure for exercise of Non-Statutory Preferential Subscription Rights

5.9.1 Offering

Subject to restrictions due to applicable securities laws (see section 2.5 "Certain restrictions on the

Offering"), the holders of the Non-Statutory Preferential Subscription Rights will have the right to

subscribe to the New Shares, at the Issue Price and in accordance with the Subscription ratio as from

13 June 2014.

The Non-Statutory Preferential Subscription Rights, represented by coupon No. 3 of the existing

shares of the Issuer, will be separated from the underlying existing shares on 10 June 2014 after the

closing of Euronext Brussels. The Non-Statutory Preferential Subscription Rights will neither be

listed on any stock exchange or otherwise tradable or transferrable nor will they be the subject of an

offer or private placement.

57

Any sale of existing shares of the Issuer prior to the closing of Euronext Brussels on 10 June 2014

will be settled “cum Non-Statutory Preferential Subscription Right” and any existing shares of the

Issuer sold after the closing of Euronext Brussels on 10 June 2014 will be sold and settled “ex Non-

Statutory Preferential Subscription Rights”. The Subscription Period will open from 13 June 2014 to

19 June 2014 inclusive, as indicated below.

Subject to restrictions due to applicable securities laws (see section 2.5 "Certain restrictions on the

Offering), Existing Shareholders, whose holding of existing shares is registered in the share register

of the Issuer will receive, at the address indicated in the relevant share register, letters informing

them of the aggregate number of Non-Statutory Preferential Subscription Rights to which they are

entitled and of the procedures that they must follow to exercise their Non-Statutory Preferential


Existing Shareholders whose holding of existing shares is held in a securities account will in

principle be informed by their financial institution of the procedure that they must follow to exercise

their Non-Statutory Preferential Subscription Rights.

Non-Statutory Preferential Subscription Rights can no longer be exercised after 19 June 2014, which

is the last day of the Subscription Period after which the Non-Statutory Preferential Subscription

Rights shall automatically no longer exist and therefore be without value. No consideration shall be

offered to holders of non-exercised Non-Statutory Preferential Subscription Rights.

5.9.2 Backstop Commitment

3D NV has unconditionally committed itself to subscribe at the Issue Price to the remainder of the

New Shares corresponding to the number of non-exercised Non-Statutory Preferential Subscription

Rights at the end of the Subscription Period.

5.9.3 Subscription

Subscription requests and the necessary coupons No. 3 representing the Non-Statutory Preferential

Subscription Rights can be submitted free of charge during the Subscription Period at the Lead

Manager or at this institution through any other financial intermediary. The Existing Shareholders

are requested to inform themselves about the costs charged by these other financial intermediaries

which they will need to bear.

Subject to the Subscription ratio, there is no minimum or maximum amount that may be subscribed

to pursuant to the Offering.

The Existing Shareholders should be aware that all New Shares they have subscribed to will be fully

allocated to them. All subscriptions are binding and may not be revoked except as described in

section 5.6 "Revocation of subscription orders" above.

58

5.10 Indicative timetable for the Offering

The Issuer may amend the dates and times of the share capital increase and periods indicated in the

above timetable and throughout the Prospectus. If the Issuer decides to amend such dates, times or

periods, it will inform investors by way of a press release and on the Issuer's Website . Any material

alterations to this Prospectus will be published in a press release, on the Issuer's Website

(www.zenitel.com), on the Lead Manager's website (www.degroof.be) and by way of a supplement

to this Prospectus in accordance with section 2.4 "Notices to Existing Shareholders".

5.11 Plan for the distribution and allocation of the New Shares

5.11.1 Categories of potential investors

Since the Offering is carried out with the granting of a Non-Statutory Preferential Subscription Right

for the Existing Shareholders, Non-Statutory Preferential Subscription Rights are allocated to all

Existing Shareholders of the Issuer, subject to applicable securities laws (see section 2.5 "Certain

restrictions on the Offering" above). Only the holders of Non-Statutory Preferential Subscription

Rights as well as 3D NV who provides the Backstop Commitment may subscribe to the New Shares,

subject to the applicable securities laws referred to above.

5.11.2 Shares held by the Issuer

The Issuer and its subsidiaries are not allowed to exercise the Non-Statutory Preferential

Subscription Rights attached to the existing shares of the Issuer held by it.

Calendar

days

Date

Detachment of coupon No. 3 T-1 10 June 2014

(at closing)

Ex-coupon Date T 11 June 2014

Start of Subscription Period T+2 13 June 2014

End of Subscription Period T+6 19 June 2014

(16:00 CET)

Backstop Commitment execution by 3D NV T+7 20 June 2014

Announcement by the Issuer via the Belgian

financial press of the results of the Offering

T+7 20 June 2014

(after Closing)

Payment Date of the New Shares T+11 24 June 2014

Issuance of the New Shares T+11 24 June 2014

Delivery of the New Shares T+11 24 June 2014

Start of trading on Euronext Brussels of the New

Shares

T+11 24 June 2014



59

5.11.3 Intention of reference shareholders

3D NV has unconditionally committed itself (i) to subscribe all New Shares through its Non-

Statutory Preferential Subscription Rights and (ii) to subscribe all New Shares not subscribed by

Existing Shareholders through their Non-Statutory Preferential Subscription Rights at the Issue Price

(the "Backstop Commitment") (see section 5.9.2 "Backstop Commitment"). In addition, 3D NV

has agreed to a Lock-Up (see section 5.17 "Lock-up arrangements").

5.11.4 Pre-allocation information

There is no Pre-allocation in the Offering.

5.11.5 Over-allotment and "green shoe"

There is no over-allotment facility and/or green shoe in the Offering.

5.12 Determination of the Issue Price

The Issue Price is fixed at €0.80 per New Share of which €0.6040682 shall represent capital and the

remainder shall be issue premium.

5.13 Placement and underwriting

5.13.1 Selling agent

The Selling Agent will be the Lead Manager.

5.13.2 Financial service

The financial services for the shares of the Issuer (including the New Shares) are provided in

Belgium by the Lead Manager. The cost of these financial services is borne by the Issuer. If the

Issuer alters its policy in this matter, this will be announced in the Belgian financial press.

5.14 Underwriting Agreement

On 10 June 2014, the Issuer entered into an underwriting agreement with the Lead Manager.

Pursuant to the terms and subject to the satisfaction or waiver of the conditions of the Underwriting

Agreement, the Underwriter has agreed to underwrite the Offering by procuring payment for all

subscribed New Shares, except for the New Shares 3D NV has unconditionally committed itself (i)

to subscribe through its Non-Statutory Preferential Subscription Rights and (ii) to subscribe pursuant

to its Backstop Commitment.

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5.15 Admission to trading and dealing arrangements

5.15.1 Listing and admission to trading

The Non-Statutory Preferential Subscription Rights (coupon No. 3) will be separated on 10 June

2014 after the closing of the stock exchange. The Non-Statutory Preferential Subscription Rights

will not be tradable on the stock exchange and are non-tradable and non-transferrable.

The existing shares of the Issuer will therefore be traded “ex-Non-Statutory Preferential

Subscription Right” as from 10 June 2014. Any sale of existing shares of the Issuer prior to the

closing of the regulated market of Euronext Brussels on 10 June 2014 will be settled "cum Non-

Statutory Preferential Subscription Rights". Any existing shares of the Issuer sold after the closing

of the regulated market of Euronext Brussels on 10 June 2014 will be sold and settled "ex Non-

Statutory Preferential Subscription Rights". A request for admission to trading on the regulated

market of Euronext Brussels of the New Shares has been submitted. The admission is expected to

take place on 24 June 2014.

5.15.2 Liquidity provider

There is no liquidity provider.

5.15.3 Stabilisations

There will be no stabilisation mechanism in relation to the Offering.

5.16 Name of the person or entity offering to sell the Shares and standstill period

No existing shares of the Issuer will be offered in the Offering.

The Issuer has undertaken to the Lead Manager that during a period of 6 months following the

Listing Date, it shall not issue any new shares or other securities, including options, warrants

convertible securities or other rights to subscribe to any new shares or other securities, or otherwise

transfer or dispose of or enter into any swap or any other transaction (including any derivative

transaction) or commitment with like effect, of whatever kind, which directly or indirectly leads to a

total or partial issue of new shares or securities irrespective whether these are or are not listed on a

stock exchange or a regulated market.

5.17 Lock-up arrangements

3D NV has agreed to a lock-up up starting as of the Listing Date and ending six (6) months after the

Listing Date. This lock-up is subject to the following exceptions which are deemed to be market

practice:

any transfer of locked shares to the legal successor of 3D NV pursuant to the merger, liqui-

dation, or de-merger of such holder, provided that the legal successor adheres to the lock-up

agreement to be entered into by the Issuer, the Lead Manager and 3D NV, and assumes all

rights and obligations of the holder concerned under this lock-up agreement through the ex-

ecution of an accession deed; or

61

any pledge of the locked shares to a Belgian financial institution securing a mortgage or loan

entered into by 3D NV; or

any transfer pursuant to a public takeover bid or squeeze-out on the locked shares; or

any transfer to a company affiliated ("verbonden") to 3D NV within the meaning of Article

11 BCC, provided that such affiliated company adheres to the lock-up agreement and as-

sumes all rights and obligations of the holder concerned under this lock-up agreement

through the execution of an accession deed; or

any transfer of locked shares to senior managers of the Issuer in the framework of a long

term incentive plan.

5.18 Expenses incurred with the Offering

The costs related to the Offering have been estimated at €250,000 and include, among other things,

the fees due to FSMA and Euronext Brussels, the remuneration of the Lead Manager and the legal

advisors and other administrative costs.

5.19 Dilution

There will be no dilution in terms of share capital participation and in terms of dividend rights for

the Existing Shareholders of the Issuer as long as they exercise all their Non-Statutory Preferential


The dilution for the Existing Shareholders (in percentage terms) who do not exercise any of their

Non-Statutory Preferential Subscription Rights can be calculated as follows: 50%, i.e.



The table below provides a simulation of the dilution for a hypothetical shareholder who owns

10,000 shares of the Issuer under different assumption regarding the part of Non-Statutory

Preferential Subscription Rights he/she wishes to exercise.

The column “Theoretical financial dilution” shows the theoretical financial dilution percentages for

Existing Shareholders, in function of different assumptions of their degree of participation in the

capital increase. This theoretical financial dilution results from the fact that the Non-Statutory Pref-

erential Subscription Rights will be without value if not exercised. It is calculated as the difference

between the 30-day average stock price and the TERP (Theoretical Ex Rights Price), divided by the

30-day average stock price.

(

)

62







63

6. INFORMATION ABOUT THE ISSUER

6.1 Corporate purpose

According to Article 3 of the articles of association of the Issuer, the corporate purpose of the Issuer

is the following:

"The corporate purpose of the company is, whether in Belgium or abroad, to carry out activities in

any way, at sea, on land as well as in space, in the sector of telecommunications, and to provide

services in the sector of communication, radio and/or television.

The company may acquire or let all materials, machines, equipment or means of transport and

facilitate the acquisition or utilisation thereof by third parties in any form.

It may participate in any manner in any company or undertaking whose corporate purpose is similar

or related to the corporate purpose of the company or whose corporate purpose is of a nature to

facilitate the realization of the corporate purpose of the company, even if indirectly.

It may even enter into agreements for collaboration, rationalization or cooperation or other

agreements with such companies or undertakings.

In particular, the company may, by means of purchase, exchange, contribution, subscription,

recurring redraws, purchase option, or in any other way, acquire all titles, values, receivables and

incorporeal rights; participate in all associations and mergers; manage and value its shares and

participations portfolio; inter alia by means of management, monitoring, control, documentation,

financial or other assistance for the companies and undertakings in which it holds interests; to

realise or liquidate these values by means of transfer, sale or by any other means.

The company may, for its own account as well as for the account of third parties, at any place and in

any manner, perform all financial, industrial and immovable acts and operations that directly or

indirectly concern its corporate purpose or are of a nature to contribute to the realisation thereof."

6.2 Corporate profile

6.2.1 Corporate name

The Issuer’s legal and commercial name is Zenitel.

6.2.2 Registered office

The Issuer’s registered office is located at Z1 Research Park, 110, 1731 Zellik. Telephone: +32 2

370 53 10. The publicly available documents related to the Issuer and quoted in this Prospectus can

be reviewed/obtained at its registered office.

The board of directors is authorised to move the registered office to any other location in Belgium.

The transfer of the registered office will be made public by the board of directors in the Annexes to

the Belgian Official Gazette.

64

The Issuer may, by resolution of the board of directors, set up branch offices, managing offices,

subsidiaries, and agencies at any place in Belgium and abroad.

6.2.3 Incorporation, amendment to the articles of association and term

The Issuer was founded on 31 March 1913 for an indefinite period of time pursuant to a deed

published in the Annexes to the Belgian Official Gazette in 1913 under number 02498.

The articles of association have been amended on numerous occasions and most recently by the

extraordinary general meeting of Shareholders of the Issuer held on 28 April 2014.

The articles of association are available for inspection at the Issuer’s registered office and the

Issuer’s website: www.zenitel.com.

6.2.4 Register of Legal Entities

The Issuer is registered with the Register of Legal Entities (Brussels) under enterprise number

0403.150.608.

6.2.5 Legal form

The Issuer Zenitel is a “naamloze vennootschap/société anonyme”, a public company with limited

liability organised and existing under the laws of Belgium. It has the capacity of a corporation

making or having made public appeal on savings.

6.2.6 Financial year

The financial year of the Issuer runs from 1 January through 31 December.


65

7. SHARE CAPITAL

7.1 Share capital

7.1.1 Share capital

On the date of this Prospectus, the share capital of the Issuer amounts to €10,000,000 and is fully

paid-up. It is represented by 16,554,422 shares, without nominal value. In order to modify the rights

attached to these, the procedure referred to in the articles of association, as provided by law, is

applicable.

7.1.2 Authorised Capital

On 28 April 2014, an extraordinary shareholders meeting decided to renew the powers of the board

of directors to increase the capital up to an amount of €10,000,000 for a period of five years as of the

date of publication of the decision of the extraordinary shareholders meeting dated 28 April 2014 in

the Annexes to the Belgian Official Gazette. The board of directors has not used its capacity

regarding the authorized capital since then.

This authorisation and power are set out in greater detail in section 7.2.5 "Modification of share

capital" below.

7.1.3 Other securities

On the date of the Prospectus, there were no warrants outstanding and there was no stock option

plan for employees applicable. The Issuer has not issued any non-voting shares.

7.1.4 Acquisition rights and options

On the date of the Prospectus, no share options and no other rights to acquire shares in the Issuer

have been granted by the Issuer.

7.1.5 Dividend policy

In view of the losses realized in the fiscal years before the publication of the Prospectus, the

decreasing but still high levels of debt and provisions and the growth strategy of the Group, no

dividends have been paid out for the financial years ended on 31 December 2011, 31 December

2012 and 31 December 2013.

The Issuer cannot make any predictions about the share price after the New Shares are issued as per

the present Offering and points out that it does not currently plan to develop a distribution pay-out

policy in the near future.

7.1.6 Evolution of the share price

On the date of the Prospectus, the subscribed capital amounted to €10,000,000. It is represented by

16,554,422 shares without nominal value and is fully paid up. The par value is €0.6040682. The

shares are quoted on Euronext Brussels (double fixing) with symbol ZENT.

66

The graph below shows the development of the closing share price of the Issuer's shares from 1

January 2012 until 2 June 2014. (see also Euronext website, www.euronext.com)

7.2 Rights attached to the shares

7.2.1 Voting rights

Each shareholder of the Issuer is entitled to one vote per share.

Voting rights can be suspended in the circumstances provided for in the BCC and in particular if the

shareholder has not complied with its notification of major holdings obligations (see section 7.4

"Notification of major holdings"). In addition, in accordance with the BCC, the voting rights

attached to shares owned by the Issuer are suspended.

Generally, the general meeting of shareholders has sole authority with respect to:

the approval of the annual financial statements and the remuneration report of the Issuer;

the distribution of profits;

the appointment and dismissal of the Issuer’s directors and statutory auditor;

the granting of release from liability to the directors and the statutory auditor;

€0.0

€0.2

€0.4

€0.6

€0.8

€1.0

€1.2

http://www.euronext.com/

67

the determination of the remuneration of the directors and of the statutory auditor for the

exercise of their mandate, including inter alia, as relevant, (i) in relation to the remuneration

of executive and non-executive directors, the approval of an exemption from the rule that

share based awards can only vest during a period of at least three years as of the grant of the

awards, (ii) in relation to the remuneration of executive directors, the approval of an

exemption from the rule that (unless the variable remuneration is less than a quarter of the

annual remuneration) at least one quarter of the variable remuneration must be based on

performance criteria that have been determined in advance and that can be measured

objectively over a period of at least two years and that at least another quarter of the variable

remuneration must be based on performance criteria that have been determined in advance

and that can be measured objectively over a period of at least three years, and (iii) in relation

to the remuneration of non-executive directors, the approval of any variable part of the

remuneration;

the approval of provisions of service agreements to be entered into with executive directors,

members of the management committee and other executives providing (as the case may be)

for severance payments exceeding 12 months’ remuneration (or, subject to a motivated

opinion by the remuneration committee, 18 months’ remuneration);

the filing of a claim for liability against directors;

decisions relating to the dissolution, merger and certain other re-organizations of the

company; and

the approval of amendments to the articles of association.

7.2.2 Right to attend general meetings

The annual general meeting is held at the place determined in the notice convening the meeting. It is

held every year on 28 April at 11:00 (Central European Time, GMT+1). If this date is a Saturday, a

Sunday or a public holiday in Belgium, the meeting is held the next business day at the same time.

The board of directors and the company's statutory auditor submit their respective annual report at

the annual general meeting which then discusses the annual accounts. Before approving the annual

accounts and the proposed allocation of the company's profit or loss, the general meeting must vote

on the release from liability of the directors and the statutory auditor. When applicable, the annual

general meeting also votes on the (re-) appointment or dismissal of the statutory auditor and/or of all

or certain directors and on all remuneration issues falling within its remit. The annual general

meeting shall also approve by a separate vote the remuneration report to be included in the annual

report.

The board of directors or the statutory auditor may, whenever the interest of the company so

requires, convene a special or extraordinary general meeting.

Such general meeting must also be convened every time one or more shareholders holding shares

representing at least 5 percent of the Issuer's share capital so request.

Shareholders holding at least 3 percent of the Issuer's share capital are entitled to request that one or

more items be put on the agenda of a general meeting already convened and to make proposal of

resolutions with respect to items already existing or to be put on the agenda.

68

The notice convening the general meeting must state the place, date and hour of the meeting and

must include an agenda indicating the items to be discussed as well as any motions for resolutions.

The notice must be published at least 30 days prior to the meeting in the Belgian Official Gazette

(Moniteur belge / Belgisch Staatsblad), in a nation-wide newspaper as well as in media that can

reasonably be relied upon for the dissemination of information within the EEA. The convening

notice must in addition be sent by ordinary mail to the holders of registered shares or registered

bonds. The annual financial statements, the annual report of the board of directors and the annual

report of the statutory auditor must be made available to the public at the company's registered office

from the date of the convening notice. The company must also publish on its website various

information including the convening notice and all documents to be submitted to the general

meeting.

All holders of shares and bonds issued by the Issuer can attend general meetings. Only shareholders,

however, may vote. The right to participate to and vote at a general meeting is subject to the

shareholder being recorded as such on the 14th day preceding the general meeting (the record date)

either in the shareholders register (in the case of registered shares), or on the books of a recognized

account holder or a settlement institution (in the case of dematerialized shares). The actual holding

on the date of the general meeting is not relevant. Holders of dematerialized wishing to participate to

and vote at a general meeting must submit, at least 6 days prior to the meeting, to the Issuer a

certificate issued by the recognized account holder, settlement institution or financial intermediary

establishing their holding on the record date. Holders of registered shares must notify the Issuer of

their wish to participate to and vote at a general meeting at least 6 days prior to the meeting.

Each shareholder has the right to participate to and to vote at a general meeting in person or by

proxy. Proxies must be delivered to the Issuer at least 6 days prior to the meeting. The board of

directors can request that shareholders use a standard form of proxy.

Provided the board of directors allows this under a special decision as mentioned in the notice of the

meeting, the shareholders may cast their votes by letter or electronically before the general meeting,

using a form prescribed and provided by the Issuer to the shareholders. If the voting form is sent by

letter, the Issuer must receive the same at least 6 days prior to the general meeting. Voting may be

electronically done up to the day prior to the general meeting.

In general, there is no attendance quorum requirement for a general meeting and decisions are

passed with a simple majority of the votes of the shares present or represented. However, capital

increases (other than those decided by the board of directors pursuant to the authorized capital),

decisions with respect to the company's dissolution, mergers, de-mergers and certain other

reorganizations of the company, amendments to the articles of association and certain other matters

referred to in the BCC require that at least 50 percent of the share capital of the Issuer be present or

represented and that at least 75 percent of the votes cast be in favour of the resolution. When an

attendance quorum requirement exists and is not met at the first meeting, a second meeting must be

convened and the second meeting can validly deliberate and vote on the items of the agenda

irrespective of the shares present or represented.

69

In accordance with Article 560 of the BCC, any decision to modify the rights of a class of shares or

to replace a class of shares with another class of shares require compliance in each class of shares

with the quorum and majority requirements applicable to amendments to the articles of association.

During any general meeting, shareholders have the right to ask questions to the directors in

connection with any item on the agenda. They may also ask questions to the directors or the

statutory auditor in connection with their respective reports presented during the meeting.

7.2.3 Rights to dividends

All shares participate in equal amounts in the profit of the Issuer (if any).

The New Shares will participate in the results of the entire financial year that begins on 1 January

2014 and every subsequent financial year.

The distribution of a dividend is as a matter of principle decided by the general meeting of

shareholders. Pursuant to the BCC, the shareholders can, in principle, decide on the profit

appropriation by a simple majority of votes cast at the general meeting of shareholders, and this on

the basis of the most recently audited annual accounts that were drawn up in accordance with the

generally accepted accounting principles in Belgium and on the basis of a (non-obligatory) proposal

from the board of directors of the Issuer.

The articles of association also authorise the board of directors to pay out interim dividends on the

profit of the current financial year in accordance with the conditions and provisions of the BCC.

Dividends can only be distributed if following the declaration and issuance of the dividends the

amount of the company's net assets on the date of the closing of the last financial year, does not fall

below the amount of the paid-up capital (or, if higher, the issued capital), increased with the amount

of non-distributable reserves.

Furthermore, prior to the dividend payment, 5 percent of the net profit must be allocated to the legal

reserve until this legal reserve amounts to 10 percent of the share capital.

The payment of dividends, if any, and the amounts and timing thereof, will depend on a number of

factors, including future revenue, capital requirements, financial conditions, general economic and

business conditions, and future prospects and such other factors as the board and the executive

committee may deem relevant and will in any case be subject to the approval of the general meeting,

without prejudice to the possibility for the board to declare an interim dividend.

Claims against the Issuer for payment of dividend shall be prescribed and become void unless made

within five years (in the case of interest) from the due date for such payment.

7.2.4 Rights in case of dissolution and liquidation

The Issuer can only be dissolved by a shareholders’ resolution passed with a majority of at least 75

percent of the votes cast at an extraordinary general meeting where at least 50 percent of the share

capital is present or represented.

70

If, as a result of losses incurred, the ratio of the Issuer's net assets to share capital is less than 50

percent, the board of directors must convene an extraordinary general meeting within two months as

of the date upon which the board of directors became aware or should have become aware of these

losses. At this general meeting, the board of directors needs to propose either the dissolution or the

continuation of the Issuer. In the latter case, the board must propose measures to redress the

financial situation. Shareholders representing at least 75 percent of the votes validly cast at this

meeting have the right to dissolve the Issuer, provided that at least 50 percent of the share capital is

present or represented at the meeting.

If, as a result of losses incurred, the ratio of the Issuer’s net assets to share capital is less than 25

percent, the same procedure must be followed. However, in that case, shareholders representing 25

percent of the votes validly cast at the meeting can decide to dissolve the company. If the amount of

the company's net assets drops below €61,500 (i.e. the minimum amount of share capital of a société

anonyme / naamloze vennootschap), any interested party may request the competent court to

dissolve the company. The court can order the dissolution of the company or grant a grace period

within which the company is to remedy the situation.

7.2.5 Modification of share capital

a. Capital increase

As a matter of principle, changes to the share capital are decided by the general meeting of

shareholders. The general meeting may at any time decide to increase or decrease the share capital.

Such resolution must satisfy the quorum and majority requirements that apply to amendments of the

articles of association (see section 7.2.2 "Right to attend General Meetings").

b. Authorised capital.

Subject to the same quorum and majority requirements, the general meeting may authorize the board

of directors, within certain limits, to increase the share capital without any further approval of the

shareholders. This is the so-called authorized capital. This authorization needs to be limited in time

(i.e., it can only be granted for a renewable period of maximum five years) and in scope (i.e., the

authorized capital may not exceed the amount of the registered capital at the time of the

authorization).

On 28 April 2014, the extraordinary general shareholders’ meeting authorised the board of directors

to increase the share capital in the context of the authorised capital up to a maximum amount of

€10,000,000.00. The board of directors may issue shares, convertible bonds and warrants, or non-

voting shares, shares with a preferential dividend and liquidation preference and convertible shares.

This authorization of the board of directors is also valid for incorporation of reserves. The board of

directors can remove or limit the preferential subscription rights of the shareholders, also to the

benefit of one or more determined persons.

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At the occasion of the capital increase, within the limits of the authorised capital, the board of

directors has the authority to request an issue premium. In the event the board of directors decides to

request an issue premium, such issue premium must be recorded on a blocked reserves account that

can only be decreased or cancelled by decision of the general meeting of shareholders taken in the

manner as required for the amendment of the articles of association.

Particularly, in accordance with Article 607, second paragraph, 2° of the BCC, the general meeting

of shareholders of 28 April 2014 has authorized the board of directors to increase the share capital of

the Issuer in one or more times, as from the date the Issuer has received the notice of the FSMA that

a public takeover bid has been launched on the securities of the Issuer, and this by means of a

contribution in cash with removal or limitation of the preferential subscription rights of the Existing

Shareholders or by means of contributions in kind and/or by issuance of voting right securities

whether or not representing the share capital, or by issuance of securities entitling to subscription of

or acquisition of such securities, even if such securities or rights are not offered by preferentially to

the shareholders in proportion to the capital that is represented by their shares. In such case the

transaction must comply with the conditions set forth in Article 607, second paragraph, 2° a) up to

and including c) of the BCC. This power is granted for a period of three years as of 28 April 2014

and is renewable.

c. Preferential rights

In the event of an increase of capital in cash through the issue of new shares, or in the case of the

issue of convertible bonds or warrants, the (existing) shareholders shall have a preferential

subscription right with regard to new shares, convertible bonds or warrants, pro rata their existing

shareholding. This preferential subscription right is transferable during the period of subscription

and within the limits of transferability of the securities to which they relate. The general meeting of

shareholders can resolve to limit or cancel the preferential subscription right. The same quorum and

majority requirements apply to such a resolution as to a resolution for any amendment to the articles

of association and is subject to special reporting circumstances.

The shareholders meeting may also decide to authorise the board of directors to restrict or cancel the

preferential subscription right in the context of the authorised capital (see section 7.2.5 b

"Modification of share capital" "Authorised capital")

7.2.6 Restrictions on free transferability

There are no provisions limiting the free transferability of the New Shares in the articles of

association of the Issuer.

However, please see section 2.5 "Certain restrictions on the Offering".

7.2.7 Governing law and jurisdiction

The New Shares will be issued in accordance with Belgian law and the Offering is governed by

Belgian law.

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The Court of Brussels is competent to heal all disputes in relation to the New Shares.

7.3 Purchase and sale of own shares

The board of directors has been authorized by means of an amendment of its articles of association

of 28 April 2014, to acquire the shares, VVPR-strips, bonus shares and certificates which relate

thereto of the Issuer by sale or exchange, or to divest them, without a prior resolution of the general

meeting, either directly or indirectly through a person who acts in its own name but on behalf of the

Issuer, or through a direct subsidiary in the meaning of Article 627 of the BCC, if the acquisition or

divestment is necessary to prevent a seriously threatening disadvantage to the Issuer. This power is

valid for a period of three years as from the publication of the decision in the Annexes to the Belgian

Official Gazette, and is renewable.

The general meeting of 28 April 2014 has moreover empowered the board of directors to acquire by

sale or exchange the maximum number of shares, VVPR-strips, bonus shares and certificates which

relate thereto as set forth in Article 620 §1 and 622 §2 of the BCC, and to divest those, either

directly or indirectly through a person who acts in his/her own name but on behalf of the Issuer, or

through a direct subsidiary in the meaning of Article 627 of the BCC, against a consideration which

cannot be less than 20% less and not be more than 20% more than the average stock exchange price

of the relevant security on Euronext during the five dealing days preceding the acquisition or

exchange or divestment. This power is valid for a period of five years as from the resolution of the

general meeting of 28 April 2014, i.e. until 28 April 2019.

The board of directors is also empowered in accordance with Article 630 §1 of the BCC, to take a

pledge, directly or indirectly through a subsidiary or a person who acts in his/her own name but on

behalf of that subsidiary or the Issuer, as stipulated in Article 630 §1 of the BCC, on the Issuer’s

shares, VVPR-strips, bonus shares or certificates which relate thereto and this in accordance with the

conditions and duration for the acquisition and divestment of own shares set forth above.

Pursuant to Article 620, §2 of the BCC, the Issuer must, as long as it is listed or as long as its

securities are admitted to on an MTF as meant by Article 2, 4° of the Act of 2 August 2002 as far as

it functions with at least one daily trade and with a central order book, inform the FSMA of

acquisitions it envisages with application of Article 620, §1 of the BCC.

The board of directors is also empowered to divest the shares or certificates of the Issuer in

accordance with Article 622, §2, 1° of the BCC.

As at the date of the Prospectus, the Issuer and its subsidiaries held 113,113 treasury shares. The

board of directors examines if the treasury shares can be used in the framework of an incentive plan

for the management team.

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7.4 Notification of major holdings

Belgian law imposes disclosure requirements on any individual or entity acquiring or transferring

voting securities or securities which give a right to voting securities, as soon as, following such

acquisition or transfer, the total number of voting rights directly or indirectly held by such individual

or entity, alone or in concert with others, goes above or falls below a threshold of 5 percent, or any

multiple of 5 percent, of the total number of voting rights attached to the company's securities.

Notwithstanding the possibility to provide for other thresholds6, the Issuer's articles of association

does not provide for any other threshold crossing.

In case a threshold is crossed, a notification must be made to the Issuer and to the FSMA. Forms for

the latter notification can be found on the website of the FSMA (www.fsma.be). Breaches of the

disclosure requirements may result in the suspension of voting rights, a court order to sell the

securities to a third party and/or criminal liability. The FSMA may also impose administrative fines.

The Issuer is required to publicly disclose any notifications received regarding increases or

decreases in major holdings of the Issuer's securities, and must mention these notifications in the

notes to its financial statements. A list as well as a copy of such notifications can be viewed on

Zenitel's website (www.zenitel.com).

It should be noted that notifications are also required where, as a result of events changing the

allocation of voting rights, the percentage of voting rights attached to securities with voting rights

reaches, exceeds or falls below the applicable thresholds, even where no acquisition or disposal of

securities occurred (e.g., share capital increase or cancellation of treasury shares) as well as when

natural or legal persons enter into, change or terminate an agreement to act in concert, where as a

result of such event, the percentage of voting rights subject to the action in concert or the percentage

of voting rights of one of the parties acting in concert, reaches, exceeds or falls below the applicable

thresholds.

7.5 Takeover bids, squeeze-out and sell-out rules

7.5.1 Public takeover bids

Public takeover bids for the Issuer's shares and other securities giving access to voting rights (such

as warrants or convertible bonds) are subject to supervision by the FSMA. Any public takeover bid

must be extended to all of the company's voting securities, as well as all other securities giving

access to voting rights. Prior to making a bid, a bidder must publish a prospectus, approved by the

FSMA prior to publication.

6 The transparency act of 2 May 2007 provides that a listed issuer's articles of association may provide for one or more of the following

additional disclosure thresholds: 1%, 2%, 3%, 4% or 7.5%.

http://www.fsma.be/

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Belgium implemented the Thirteenth Company Law Directive (Directive 2004/25/EC) by an act of 1

April 2007 and a royal decree of 27 April 2007 (the "takeover bid legislation"). According to the

takeover bid legislation, a mandatory bid will need to be launched if a person, as a result of his own

acquisition or the acquisition by persons acting in concert with him or by persons acting for his

account, directly or indirectly holds more than 30 percent of the voting securities in a company

having its registered office in Belgium and of which at least part of the voting securities are traded

on a regulated market or on a multilateral trading facility designated by a Royal Decree. This

requirement applies to shares in the Issuer.

There are several provisions of the BCC and certain other provisions of Belgian law, such as the

obligation to disclose major holdings (see section 7.4 "Notification of major holdings") and merger

control, that may apply towards the Issuer and which may create hurdles to an unsolicited tender

offer, merger, change in management or other change in control. These provisions could discourage

potential takeover attempts that other shareholders may consider to be in their best interest and could

adversely affect the market price of the Issuer's shares. Such provisions may also have the effect of

depriving the shareholders of the opportunity to sell their shares at a premium. In addition, pursuant

to the BCC, the board of directors of the Issuer may in certain circumstances, and subject to prior

authorization by the shareholders, deter or frustrate public takeover bids through dilutive issuances

of equity securities (pursuant to the authorized capital) or through share buy-backs (i.e. purchase of

own shares). (see also section 7.2.5 "Modification of share capital" and section 7.3 "Purchase and

sale of own shares").

7.5.2 Squeeze-out

Pursuant to Article 513 of the BCC and, in accordance with the act of 1 April 2007 and the royal

decree of 27 April 2007, a person or entity, or different persons or entities acting alone or in concert,

who, together with the relevant company, own 95 percent of the voting securities in a public

company, can acquire the totality of the securities conferring (potential) voting rights in that

company following a squeeze-out offer. The shares that are not voluntarily tendered in response to

such offer are deemed to be automatically transferred to the bidder at the end of the procedure. The

consideration for the securities must be in cash and must represent the fair value as to safeguard the

interests of the transferring shareholders.

7.5.3 Sell-out right

In accordance with the act of 1 April 2007 and the royal decree of 27 April 2007, holders of

securities conferring (potential) voting rights may require an offeror who, acting alone or in concert,

following a takeover bid, owns 95 percent of the voting capital or 95 percent of the securities

conferring voting rights in a public company to buy their securities at the price of the bid, upon the

condition that the offeror has acquired, through the bid, securities representing at least 90 percent of

the voting capital subject to the takeover bid.

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7.5.4 Takeover bids instigated by third parties during the previous financial year and the

current financial year

No public takeover bid for the Issuer's shares and other securities giving access to voting rights has

been launched during the financial year which closed on 31 December 2013 up to the date of this

Prospectus.

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8. MANAGEMENT AND GOVERNANCE

8.1 General

This section summarizes the rules and principles by which the corporate governance of the Issuer is

organized pursuant to Belgian company law, the Issuer's articles of association and the Issuer's

corporate governance. It is based on the Issuer's articles of association and the Issuer's Corporate

Governance Charter.

The Issuer's Corporate Governance Charter has been construed in accordance with the

recommendations set out in the Belgian Corporate Governance Code issued on 12 March 2009 as

well as in accordance with any applicable Belgian legislation.

The Issuer has adopted the Belgian Corporate Governance Code 2009 as the reference code. The

Belgian Corporate Governance Code 2009 is available at the following website:

www.corporategovernancecommittee.be. No other corporate governance practices are applied by the

Issuer.

The board of directors of the Issuer intends to comply with the Belgian Corporate Governance Code

2009, but it believes that certain deviations from the provisions and principles of the Belgian

Corporate Governance Code 2009 are justified in view of the Issuer’s particular situation and size.

These deviations are further explained in this section.

The board of directors of the Issuer reviews its corporate governance charter from time to time and

makes such changes as it deems necessary and appropriate. The charter is available free of charge on

the Issuer’s website (www.zenitel.com) and at the registered office of the Issuer.

8.2 Board practices

8.2.1 General provisions

The board of directors of the Issuer may perform all acts necessary or useful for achieving the

Issuer’s corporate purpose, with the exception of those acts that are by law or the Issuer’s articles of

association expressly reserved to the shareholders’ meeting. The board of directors can transfer its

competencies for special and specific activities to an authorized representative, even if this person is

not a shareholder or a director.

The board of directors of the Issuer is composed of a minimum of three and a maximum of twelve

members. Currently, there are seven board members, of whom six members are non-executive

directors. Four directors are independent directors within the meaning of article 526ter of the BCC.

The articles of association state that directors are elected for a renewable term of six years

maximum, which term ends at the relevant annual shareholders’ meeting. However, all current

directors are appointed for three years. Directors may be dismissed by resolution at the shareholders’

meeting at all times. Resigning directors may be reappointed.

http://www.corporategovernancecommittee.be/


77

If a directorship becomes vacant before the expiry of its term, the remaining directors will have the

right to temporarily appoint a new director to fill the vacancy until the shareholders resolve at a

shareholders’ meeting to appoint a new director. This item must be put on the agenda of the next

shareholders’ meeting.

A meeting of the board of directors is validly constituted if there is a quorum, consisting of at least

half of the members present in person or represented at the meeting. If such quorum is not met, a

new board meeting must be convened to deliberate and decide on the matters on the agenda of the

board meeting for which a quorum was not present. In any event, the board of directors may only

validly proceed if at least two directors are present or represented.

Meetings of the board of directors are convened by the chairman of the board or by at least two

directors whenever the interests of the Issuer so require.

8.2.2 Chairman of the board of directors

The chairman is elected among the members of the board of directors for a period which in principle

corresponds to his term as a director.

The chairman is responsible for ensuring that the board of directors operates in accordance with the

Corporate Governance Charter. Where necessary, he is assisted with this task by the committees.

The chairman is responsible for leading the board. He plans the meetings of the board of directors

and, in cooperation with the CEO and the Issuer's secretary, draws up the schedule of meetings of

the board of directors and the committees. He prepares, together with the CEO and Issuer's

secretary, the general agenda for meetings of the board of directors, covering the topics that have to

be discussed during the year, as well as the agenda for each meeting, indicating for each item on the

agenda whether this is for information, discussion or decision.

The chairman promotes the continuous interaction and dialogue in the board of directors. The

chairman ensures that the board of directors receives up-to-date and relevant information about

important aspects of the strategy, the business activities and the financial situation of the Issuer,

including developments regarding competition. He takes initiatives to help establish a climate of

respect, trust and openness within the board of directors in general and between the non-executive

members of the board of directors and the senior or executive management in particular.

8.2.3 Independent directors

A director is considered to be an independent director if he or she meets the criteria set out in Article

526ter of the BCC.

The Corporate Governance Charter contains further explanations on this matter, under the chapter

"Composition of the board of directors" and can be found on the website.

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8.2.4 Composition of the board of directors

On the date of the Prospectus, the board of directors consists of seven members, as follows.

Name and position Independent /

dependent

Executive / non-

executive

Term*

Beckers Consulting BVBA,

permanently represented by

Eugeen Beckers, Chairman

Dependent Non-executive

member since 2010

2017

Blanco Blad BVBA, permanently

represented by Jo Van Gorp

Independent Non-executive

member since 2010

2016

Kenneth Dåstøl, CEO Dependent Executive member

since 2010

2016

Value Research Group BVBA,

permanently represented by Peter

Van de Weyer

Dependent Non-executive

member since 2014

2017

Wenche Holen Independent Non-executive

member since 2012

2015

Grethe Viksaas Independent Non-executive

member since 2012

2015

VZH NV, permanently

represented by Eric Van Zele

Independent Non-executive

member since 2006

2015

*The term of the mandates of the directors will end immediately after the annual shareholders’ meeting held in

the year corresponding to each director’s name.

There is no family relationship between any of these persons.

At the moment of his reappointment in 2012, VZH NV was not independent with regards to Art.

526ter of the BCC due to the fact that he participated in transactions relating to the sale of

respectively the majority share (in 2009) and the remaining minority share (in 2011) of Zenitel

Belgium NV to Crescent NV. VZH NV is a shareholder and director of Crescent NV.

At the general meeting of shareholders of 2013, VZH NV complied with all prescriptions of Art.

526ter of the BCC, which is why the board of directors proposed to the general assembly to enact

VZH NV as an independent director as from that day.

The general meeting of shareholders reappointed one independent and two dependent directors in

2013: Blanco Blad NV as an independent director and Kenneth Dastøl and Frank Donck, both as

dependent directors. Their mandate lasts until the general assembly in 2016.

The board of directors held on 25 February 2014 took note of the resignation of Frank Donck from

its office of director of the Issuer, with effect as from 25 February 2014 and co-opted as from the

same date Value Research Group BVBA, permanently represented by Peter Van de Weyer as

director of the Issuer. The general meeting of shareholders held on 28 April 2014 decided to appoint

Value Research Group BVBA, permanently represented by Peter Van de Weyer as director of the

Issuer with immediate effect until the general meeting of 2017 and reappointed Beckers Consulting

BVBA, permanently represented by Eugeen Beckers, as dependent director until the general meeting

of 2017.

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The biographies and the principal activities outside the Issuer of the members of the board of

directors or their permanent representatives (in the event the director is a legal person) are set out

below.

Eugeen Beckers (permanently representing Beckers Consulting BVBA) (°1953) – Mr. Beckers

is the Chairman of Zenitel. From January 2008 till December 2009 Mr. Beckers was CEO of Zenitel.

In this role he led the company through large restructuring operations. Since 2010, Mr. Beckers has

been Chairman of the board of directors. From the end of 2003 until the beginning of 2007, Mr.

Beckers was CEO of Telecom Malagasy, the privatized telecom provider of Madagascar. Before

that, Mr. Beckers held senior positions in the BT Group for more than ten years. Amongst others, he

was VP Operations BT Ignite, Managing Director Cegetel Enterprises in France, Director Sales and

Service BT Europe and Country Manager BT Belgium Ltd. Mr. Beckers obtained a Bachelor’s

degree in Computer Sciences at the Antwerp Economic High School.

Jo Van Gorp (permanently representing Blanco Blad BVBA) (°1964) – Mr. Van Gorp has been

a member of Zenitel’s board of directors since 2010. He is currently advising companies in areas of

general management, marketing, strategy, change management, organizational repositioning, legal

and regulatory affairs and public policy. Some of his recent mandates are: COO of Right Brain

Interface NV from October 2013 until January 2014, CEO of Dacentec NV from June 2011 until

February 2013, CEO of Topcom Europe NV from May 2010 till June 2011, and interim CEO of

DNS BE from October 2009 till March 2010. Mr. Van Gorp was a member of the Telenet executive

team consecutively in his role of EVP & General Council (2004-2006) and Executive Vice President

Residential Markets (2006-2009). Before joining Telenet in 2004, Mr. Van Gorp had been CEO at

Level 3 Communications NV (1998-2004), Vice President Legal & Regulatory Affairs/Business

Development at Verizon Business (1994-1998) and Senior Advisor European Regulation at BT

Global Services (1992-1994). Mr. Van Gorp obtained Master’s degrees in both Law at the KU

Leuven and European Law at the Europa Institute of the University of Saarland.

Kenneth Dåstøl (°1969) – Mr. Dåstøl became CEO and Managing Director of Zenitel in 2010. He

has worked for Zenitel since 2000. As from 2005 he became Executive Vice President of the SCS

operations. Before joining Zenitel, he worked as Controller and afterwards as Finance Manager for

Kongsberg Norcontrol Systems AS (1995-2000). He holds a Master’s degree in Management and a

degree in Commercial Economics and Organizational Development.

Peter Van de Weyer (permanently representing Value Research Group BVBA) – (°1967) -

Value Research Group BVBA, represented by Mr Van de Weyer, became a member of Zenitel's

board of directors in 2014. Since 2004, Mr Van de Weyer manages the private equity investments at

3D NV. He is currently chairman of Serax and Libeco-Lagae and holds mandates as a director in

Audioprof, Aspel and Muller. Between 2005 and 2012, he was chairman of Emerson & Cuming

Microwave Products. He started his career in investment management and strategy advice. He holds

a MBA from the KU Leuven.

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Wenche Holen (°1964) – Mrs. Holen was in April 2012 appointed as an independent director of

Zenitel NV. She is Executive Vice President of Bama Gruppen and is responsible for Strategy and

Business Development and for a business segment. Before joining Bama Gruppen in 2010 she has

held several executive functions at companies within the Telenor group, primarily in the areas of

products, services and media. Mrs. Holen has a profound knowledge of marketing and media in

particular. Mrs. Holen is also a member of the board of directors of Intelecom Group and was on the

board of directors of several other Norwegian companies in the past. Mrs. Holen obtained an

Engineering degree at Gjøvik School of Engineering and post-graduate degrees in Business

Economics and Strategic Leadership at the Norwegian Business School and at the London Business

School.

Grethe Viksaas (°1958) – Mrs. Viksaas was in April 2012 appointed as an independent director of

Zenitel NV. She is a founder and has been CEO of the Basefarm group since 2000. Until then she

has held several management positions in different Norwegian ICT companies (e.g. SOL Systems

AS, Ericsson AS and Norsk Data). Mrs. Viksaas has a profound knowledge of the ICT market in

Norway and internationally. Mrs. Viksaas is also Chairman of the board of directors of Basefarm

AB, Basefarm BV and Aal Station. Mrs. Viksaas obtained a Master’s degree in Computer Science at

the University of Oslo.

Eric Van Zele (permanently representing VZH NV) (°1948) – Mr. Van Zele joined the board of

directors of Zenitel in 2006. He has been President and CEO of Barco NV since January 2009. He

also serves as Chairman of the Board of Reynaers Aluminum NV in Duffel, Belgium. Prior to 2009,

Mr. Van Zele was Director on the management board of the Indian Avantha Group and served as

President and CEO of Pauwels International from 2004 through 2008. Prior to that, he was President

and CEO of Telindus NV (2000-2003) and Vice President of Raychem Corporation (Menlo Park,

CA, 1972-1999). Eric Van Zele holds a Master’s degree in Mechanical Engineering (KU Leuven

1972) and post-graduate degrees in management from Stanford University (1992).

8.3 Executive committee


The articles of association foresees in the possibility for the Issuer to establish a management

committee in accordance with article 524bis of the BCC. Such committee has not yet been installed.

8.4 Daily Management

8.4.1 CEO

The board of directors appoints and dismisses the managing director, also referred to as the Chief

Executive Officer or CEO (the "CEO"). The board of directors appointed Mr. Kenneth Dåstøl as

CEO of the Group as of January 1, 2010.

The CEO is authorized to decide on all matters of daily management (“dagelijks beleid”) to the

extent permitted by law and as defined in the articles of association. He is responsible and

accountable for the complete, timely, reliable and accurate preparation of the Issuer's financial

statements, in accordance with the accounting standards and policies of the Issuer, and presenting to

the board of directors a balanced and understandable assessment of the Issuer’s financial situation.

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The CEO has the power to resolve any issue of daily management and reports to the board of

directors. He cannot be the chairman of the board. He works in close cooperation with the board of

directors and its committees to enable the board, the chairman and the committees to exercise their

responsibilities. The managing director and the chairman of the board meet regularly to discuss the

strategic initiatives and all relevant matters of daily management and to determine in dialogue the

agenda for the board of directors.

8.4.2 Executive Team

The executive team is appointed by the board of directors. The team consists of the CEO (Kenneth

Dåstøl) and the Chief Financial Officer (Mark Küpers), and reports to the board of directors.

The role of the executive team is, among others, to review envisaged acquisitions, mergers and

divestments, review corporate restructuring programs, update and develop alternative long term

strategies, and present this to the board of directors and to execute actions based on decisions of the

board of directors. The team is established to ensure the fast and efficient management and control

of the activities and to enable adequate reporting and exchange of information with the board of

directors and within the senior management team.

The executive team does not act as a management committee in the meaning of Article 524bis of the

BCC.

8.4.3 Senior Management Team

The operations of the Issuer are managed by a senior management team.

The members of the senior management team are appointed by the board of directors on the

proposal of the nomination and remuneration committee.

On the date of the Prospectus, the senior management team consisted of the following members:

Kenneth Dåstøl, Mark Küpers, Thomas Hægh, Svein Damre, Svein Lindhjem, Hanne Eriksen,

Cecilie Bergenstjerna and Tor Kristian Lystad.

The senior management team does not act as a management committee in the meaning of Article

524bis of the BCC.

The senior management team meets every month and discusses the operations of the Group.

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8.5 Other boards' committees

8.5.1 Audit Committee

The board of directors has appointed an audit committee, which must consist of at least three

members, all of whom are non-executive directors, at least one of whom should be independent.

Currently the audit committee is composed of five non-executive directors of whom three are

independent. The audit committee assists the board of directors in fulfilling its monitoring

responsibilities with respect to control in the broadest sense.

The audit committee reports regularly to the board of directors on the exercise of its duties and on

any matters in respect of which the audit committee considers that action or improvement is needed.

It also makes recommendations as to the necessary steps to be taken.

The role of the audit committee is to supervise financial reporting, administrative, legal and tax

procedures and follow up on financial and operational audits, as well as recommend the choice and

remuneration of the statutory auditor. The committee should report regularly to the board of

directors on its findings and conclusions. Furthermore, it should inform the board of directors

regarding all areas in which, in its opinion, action or improvement is necessary. The audit committee

should produce recommendations concerning the necessary steps that need to be taken. The audit

review and the reporting on that review should cover the Issuer and its subsidiaries as a whole.

The audit committee has specific tasks, including the Issuer’s financial reporting, internal controls

and risk management, and the internal and external audit process. These are further described in the

terms of reference of the audit committee, as set out in the Issuer’s Corporate Governance Charter.

In principle, there should be at least four audit committee meetings per year. The audit committee

also meets at least twice a year with the statutory and internal auditors to discuss the auditing

process.

The members of the audit committee shall at all times have full and free access to the Chief

Financial Officer, as well as to any employee to whom they may require access in order to fulfil

their responsibilities.

On the date of the Prospectus, the audit committee consists of:

Name and position Term*

Beckers Consulting BVBA, permanently represented by Eugeen Beckers 2017

Blanco Blad BVBA, permanently represented by Jo Van Gorp, Chairman and

independent director

2016

Value Research Group BVBA, permanently represented by Peter Van de Weyer 2017

Wenche Holen, independent director 2015

Grethe Viksaas, independent director 2015

* The term of the mandates of the directors will end immediately after the annual shareholders’ meeting held

in the year corresponding to the director’s name.

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8.5.2 Nomination and Remuneration Committee

The board of directors decided to merge the remuneration committee and the nomination committee

into one committee. The nomination and remuneration committee is responsible for the selection of

suitable candidates for the appointment to the board and may make recommendations to the board of

directors with regards to the appointment of directors and members of the executive management.

The nomination and remuneration committee also makes recommendations to the board of directors

on the remuneration policy of the Issuer and the remuneration of board members and the members

of the executive management, and where appropriate, on the resulting proposal to be submitted by

the board of directors to the general meeting of shareholders. It also prepares the remuneration

report as set out further in this declaration with regards to corporate governance and provides

explanations to this report at the annual general meeting of shareholders.

The nomination and remuneration committee ensures that the procedure for appointing and

reappointing directors, committee members, CEO, and senior managers of the Issuer and its

subsidiaries is as objective as possible. The committee ensures that the remuneration policy is

applied objectively.

The nomination and remuneration committee consists of three non-executive directors, with two of

them being independent. The CEO participates in the nomination and remuneration committee

meetings but leaves the meeting whenever he and/or his remuneration is being discussed.

Furthermore, the chairman of the board of directors has an open invitation to attend the nomination

and remuneration committee meetings.

The nomination and remuneration committee advises the board of directors on applications for and

the appointment of directors, committee members, CEO and senior managers; the scope and

composition of the board of directors, the committees and senior management; and the remuneration

policy for the directors, committee members, CEO, and senior managers.

More information on the tasks of the nomination and remuneration committee can be found in the

Issuer’s Corporate Governance Charter which is available on the website (www.zenitel.com).

When carrying out its duties with regards to remuneration, the nomination and remuneration

committee takes account of what is customary in Belgium, Norway and abroad in the sector in

which the Issuer operates and in companies of a similar scope to the Issuer.

Once a year, the nomination and remuneration committee discusses the operation and performance

of the key staff. The parameters in this respect are clearly specified by the nomination and

remuneration committee.

The nomination and remuneration committee meets at least twice a year and in any case where

changes have to be made to the composition of the board of directors, the committees or senior

management.


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On the date of the Prospectus, the nomination and remuneration committee consists of:

Name and position Term*

Blanco Blad BVBA, permanently represented by Jo Van Gorp, independent director 2016

Value Research Group BVBA, permanently represented by Peter Van de Weyer,

Chairman

2017

Wenche Holen, independent director 2015

* The term of the mandates of the directors will end immediately after the annual shareholders’ meeting held

in the year corresponding to the director’s name.

8.6 Litigation statement concerning directors and members of the executive committee

On the date of this Prospectus, except for (i) Blanco Blad BVBA, permanently represented by Jo

Van Gorp, who was a director of Topcom Europe NV with registered office at Grauwmeer 17, 3001

Heverlee, and registered with the Crossroads Bank for Enterprises (RLE Leuven) under the number

BE 0436.875.627 and which has been declared bankrupt by judgment of the commercial court at

Leuven dated 10 January 2012, and for (ii) Eugeen Beckers who was a director and chairman of

NRSFrance S.A. (formerly Zenitel Wireless France S.A.), with registered office at 2, boulevard

Henri Becquerel - Centre d'Affaires Sainte-Agathe Cormontaigne, 57970 Yuts, France for which the

Tribunal de Grande Instance de Thionville dated 2 September 2010 has declared the opening of the

judicial liquidation, none of the directors and members of the executive team of the Issuer for at

least the previous five years:

has any convictions in relation to fraudulent offences;

has held an executive function in the form of a senior management or a member of the

administrative, management or supervisory bodies of any company at the time of or

preceding any bankruptcy, receivership or liquidation; or has been subject to any official

public incrimination and/or sanction by any statutory or regulatory authority (including any

designated professional body); or

has ever been disqualified by a court from acting as a member of the administrative,

management or supervisory bodies of a company or from acting in the management or

conduct of the affairs of any company.

8.7 Corporate governance charter

Rules and regulations regarding corporate governance have changed significantly during the past

few years. Besides the existing prescriptions of the Belgian Corporate Governance Code 2009 with

its “comply or explain” approach and the Act of 6 April 2010 to reinforce corporate governance, the

Act of 20 December 2010 on the exercise of certain rights of shareholders in listed companies has

been published in 2011.

The Issuer has adopted the Belgian Corporate Governance Code 2009 as the reference code. The

Belgian Corporate Governance Code 2009 is available at the following website:

www.corporategovernancecommittee.be. No other corporate governance practices are applied by the

Issuer.

http://www.corporategovernancecommittee.be/

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The Corporate Governance Charter of the Issuer was updated in March 2012 in order to be in line

with the new Belgian rules and regulations with respect to Corporate Governance. An update has

also been made in February 2014 to the Charter provisions of the Act of 20 December 2010 on the

exercise of certain rights of shareholders in listed companies. A copy of this Corporate Governance

Charter is available on the Issuer's website.

The Issuer complies with most of the nine principles of the Belgian Code for Corporate Governance

2009 as well as with the majority of the provisions. Some of the provisions are not complied with

but their objectives are reached through other measures.

Below is an overview of the provisions that are not complied with, with an explanation and the

measures that the Issuer has taken in order to reach their objectives:

due to the size of the Issuer, the board of directors has decided to combine the nomination

committee and the remuneration committee and therefore does not follow principle 5.3 and

principle 5.4 of the Belgian Code for Corporate Governance 2009 on these topics;

principle 4 of the Belgian Corporate Governance Code 2009 stipulates that the Issuer should

have a rigorous and transparent procedure for the nomination and evaluation of its board of

directors and its members. The Issuer is confident that it fulfils the individual requirements

stipulated in this principle, however not as formalized as indicated in Principle 4 of the

Corporate Governance Code 2009. Through the regular discussions of the chairman with the

individual members of the board of directors and through an evaluation of each board

member at the moment of the nomination of the renewal of the mandate, the board of

directors is confident that it meets the objectives of Principle 4 of the Belgian Corporate

Governance Code 2009. A self-evaluation is also undertaken by the board of directors on a

regular basis

8.8 Remuneration and benefits


It is the remuneration and nomination committee’s responsibility to determine the remuneration

policy for non-executive board members and executive team.

Based on bench mark analysis, input from external advisers, input from executive management and

the Issuer’s strategy, the remuneration and nomination committee determined a remuneration policy

and remuneration levels for executive management.

The remuneration of non-executive directors are fixed amounts. No variable remunerations are being

granted. The chairman receives the double amount.

The Issuer’s remuneration policy has been consistent with the remuneration policy in previous years.

The executive management’s remuneration is based on a fixed and a variable remuneration in cash.

The variable part of the remuneration is, on the one hand, based on the realization of the budgeted

group results, and, on the other hand, of specifically defined quantitative and qualitative financial

and operational targets in their field of responsibility.

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In 2013 no remuneration was given based on shares, warrants or any other rights to acquire shares.

The CEO is the only executive director. In his quality of director, he does not receive any

remuneration.

The members of the audit committee are also remunerated with a fix amount per year for the

exercise of their mandate. The chairman of the audit committee receives the double amount.

The members of the nomination and remuneration committee do not receive any remuneration.

The Issuer intends to continue its current remuneration policy in the coming years.

8.8.2 Remuneration policy for directors

The annual remuneration for a non-executive director is a fixed fee of €20,000. The chairman of the

board of directors receives the double of that amount. Similarly, the members of the audit committee

receive a fixed fee of €7,500 and the chairman of the audit committee €15,000 on an annual basis,

for their specific tasks in the audit committee. No benefits in kind nor variable remuneration are

granted to the non-executive members of the board of directors. No amounts have been set aside or

accrued by the Issuer or its Subsidiaries to provide pension, retirement or similar benefits to the non-

executive directors. The CEO, as the only executive director, is not remunerated for his work in the

board of directors. No benefits in kind nor variable remuneration are granted to the members of the

board of directors.

A summary of the remuneration of the board members in 2013 is shown in the table below.

Name and position Capacity Remuneration in €

Beckers Consulting BVBA, permanently represented

by Eugeen Beckers, Chairman

Non-executive 47,500

Blanco Blad BVBA, permanently represented by Jo

Van Gorp

Non-executive 35,000

Kenneth Dåstøl, CEO Non-executive NA

Frank Donck Non-executive 27,500

Wenche Holen Non-executive 27,500

Grethe Viksaas Non-executive 27,500

VZH NV, permanently represented by Eric Van Zele Non-executive 20,000

As of 1 January 2010, Beckers Consulting BVBA entered into a separate consulting agreement with

the Issuer. Conforming to this agreement, Beckers Consulting BVBA reports directly to the board of

directors and the scope of its advisory services covers limited and well defined areas. This

agreement has been discussed by the remuneration and nomination committee in 2010, and

approved by the board in 2010 with respect to the conflict of interest procedure. The agreement

foresees assistance by Mr. Eugeen Beckers on a time and material basis. The fees have been set at

arm’s length. With reference to this agreement, Beckers Consulting BVBA invoiced €51,652 in

2013 to the Issuer for consulting services performed besides the above mentioned remuneration for

his directorship.

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8.8.3 Remuneration policy of the CEO and the members of the Executive Team and other

members of management

The remuneration of the CEO and the rest of the executive team consist out of two parts, namely: a

fix part and a variable part. The variable part is calculated on the basis of a fix amount (which is

defined in the employment or management agreement), multiplied by a performance factor. The

latter is made-up of parameters which are established annually by the nomination and remuneration

committee. The variable remuneration of the executive team is based on the realization of certain

targets during a period of one year. The targets can be the budgeted group financial results and/or

specifically defined quantitative and qualitative operational targets in their field of responsibility.

Measurement of financial targets is typically Recurrent EBITDA and Turnover. Each target will

have a weight and a score where the actual performance is measured against the set targets.

Annually each executive member is reviewed and the actual performance on quantitative and

qualitative operational targets which were set and agreed upon in advance, are compared to the

actual results. Based on this comparison between actual performance and agreed targets upfront, the

variable remuneration is granted and determined. The evaluation period follows the financial year of

the Issuer.

In order to earn a bonus, the average score needs to be higher than 75% of the maximum score. All

members of the executive team earned a bonus in 2013. The bonus level is based on a percentage of

the annual salary.

Remuneration to the CEO and the rest of the executive team is made in NOK. Amounts for both

years are converted to euro with a NOK/EUR rate of 7.87.

Group insurance premiums are pension costs associated to a direct contribution pension plan. Other

benefits mainly consist of car benefits.

A summary of the remuneration of the CEO and executive team in 2013 is shown in the table below.

Remuneration in € CEO Executive Team excluding CEO

2013 2012 2013 2012

Basic

Remuneration

280,437 271,171 139,018 134,350

Variable

Remuneration*

107,632 94,084 39,797 51,233

Group insurance

premiums

8,791 7,433 8,845 7,426

Other Benefits 31,045 30,196 23,358 22,510

Total 418,120 402,884 224,283 215,518

* Variable remuneration relating to the bonus agreements for the executive team. The amounts shown relate to

remuneration earned in the relevant year and paid in cash the year after.

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8.9 Shares and options held by directors and Executive Team

On the date of this Prospectus Eugeen Beckers (permanent representative of Beckers Consulting

BVBA) (director and chairman) holds 103,421 shares of the Issuer and Kenneth Dåstøl (director and

CEO) holds 60,388 shares of the Issuer. On the date of the Prospectus, no shares or options are held

by the directors or the executive team of the Issuer otherwise than as mentioned above.

8.10 Statutory auditor

The statutory auditor of ZENITEL NV is BDO Bedrijfsrevisoren Burg. Venn. CVBA, The

Corporate Village, Da Vincilaan 9 Bus E6, 1935 Zaventem, represented by Ms. Veerle Catry. BDO

Bedrijfsrevisoren was appointed for a period of three years at the general shareholders’ meeting of

April 29, 2013. The Auditor is a member of the Institute for Company Auditors (‘Instituut der

bedrijfsrevisoren’). The remuneration amounted to €32,590 per year. The total fee for BDO for the

Group audit amounted to €106,081 per year.

8.11 Related party transaction

8.11.1 Directors' conflicts of interest

Directors are expected to arrange their personal and business affairs so as to avoid conflicts of

interest with the Issuer.

Any director with a conflicting financial interest (within the meaning of Article 523 of the BCC) on

any matter submitted to the board of directors must bring it to the attention of its fellow directors,

and may not take part in any deliberations or voting related to such matter. The Auditor must also be

informed and the conflict of interest must be disclosed in both the minutes of the board of directors

and in the annual management report.

The Issuer's Charter of Corporate Governance also provides that directors do not undertake any

competing activity in respect of the Issuer or its subsidiaries, either directly or indirectly. As far as is

possible, each director arranges his personal and commercial interests so that no conflicts of interest

with the Issuer can arise. However, if any conflict of interest arises, the director concerned informs

the chairman of this, and the chairman takes the necessary steps with a view to applying the valid

regulations on conflicts of interest prescribed by the BCC.

Should there be any question of a conflict of interest involving the chairman, then he informs the

independent director with the most years' service of this, and the latter takes the necessary steps with

a view to applying the valid regulations on conflicts of interest.

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Irrespective of whether a particular activity falls under the legal regulations on conflicts of interest,

directors are not permitted to conclude agreements, directly or indirectly, with the Issuer or her

subsidiaries relating to the provision of services or goods, or to conclude any other transaction or

agreement, except with the express consent of the chairman or two directors who are not concerned

(as far as this does not fall automatically under the authority of the board of directors). The chairman

or the directors in question examine whether these agreements are entered into under the usual

commercial conditions and in line with the market. If the chairman grants permission, this is

announced at the next board of directors meeting.

The same procedure is also applicable on the CEO and other members of the Senior Management of

the Issuer.

No transactions or operations occurred in 2013 that would have required the application of Article

523 of the BCC or of the procedure provided by the Corporate Governance Charter described above.

Moreover, no transactions or operations occurred between the financial year that ended on 31

December 2013 and the date of the Prospectus that would have required application of Article 523

of the BCC or of the procedure provided by the Corporate Governance Charter described above.

8.11.2 Transactions with affiliated parties

In accordance with Article 524 of the BCC, Belgian listed companies such as the Issuer wishing to

enter into intra-group or related party transactions must follow a special procedure. The procedure

applies to decisions or transactions between the Issuer and one of its affiliates (other than a

subsidiary) or between a subsidiary of the Issuer and one of the affiliates of the subsidiary (other

than a subsidiary of the subsidiary). It does not apply to decisions or transactions taken in the

ordinary course of business and which are entered into at arm's length or decisions or transactions

with a value of less than 1 percent of the consolidated net assets of the Issuer.

Prior to any such decision or transaction, the board of directors must appoint a special committee

composed of three independent directors, which must each meet the criteria set out in Article 526ter

of the BCC, assisted by one or more independent experts. This committee must assess the pros and

cons of the decision or transaction for the company and its financial consequences. It must

determine whether or not the decision or transaction causes a disadvantage to the Issuer that is

manifestly illegitimate in view of the Issuer’s policy. If the committee determines that the decision

or transaction is not manifestly illegitimate, but is of the opinion that it will still be detrimental to the

Issuer, it must explain which advantages are taken into account in the decision or transaction to

compensate the disadvantages. All these elements must be set out in the committee’s advice. The

board of directors must then take a decision, taking into account the opinion of the committee. Any

deviation from the committee’s advice must be explained. If one or more directors have a conflict of

interest, the procedure described in section 8.11.1"Directors' conflicts of interest" applies and, in

particular, the director(s) concerned are not authorised to participate in the deliberation and vote.

The committee’s advice and the decision of the board of directors concerning the related party

transaction must be notified to the Auditor, who must render a separate opinion. The conclusion of

the committee, an excerpt from the minutes of the board of directors and the opinion by the Auditor

must be included in the annual management report of the board of directors.

90

No transactions or operations occurred in 2013 that would have required application of Article 524

of the BCC. Moreover, no transactions or operations occurred between the financial year that ended

on 31 December 2013 and the date of the Prospectus that would have required application of Article

524 of the BCC, except for the unilateral undertaking by 3D NV dated on or about 10 June 2014 by

which 3D NV has unconditionally committed itself (i) to subscribe all New Shares through its Non-

Statutory Preferential Subscription Rights and (ii) to subscribe all New Shares not subscribed by

Existing Shareholders through their Non-Statutory Preferential Subscription Rights at the Issue Price

(the "Backstop Commitment").

The procedure pursuant to Article 524 of the BCC with respect to the abovementioned unilateral

undertaking by 3D NV was initiated at the meeting of the board of directors held on 4 June 2014.

Accordingly, a written motivated advice by the committee of three independent directors of Zenitel

assisted by an independent expert (Peter Callens) was prepared and provided to the board of

directors on 5 June 2014. The board of directors at its meeting held on 5 June 2014 acknowledged

the written motivated advice by the committee of three independent directors assisted by the

independent expert, deliberated on the abovementioned unilateral undertaking by 3D NV, stated that

the procedure pursuant to Article 524 of the BCC was followed, stated that written motivated advice

was followed and approved the unilateral undertaking by 3D NV. Finally, on 5 June 2014 in

accordance with Article 524 of the BCC, the Auditor granted an opinion on the faithfulness of the

data included in the written advice of the committee of three independent directors assisted by the

independent expert and the abovementioned minutes of the board of directors.

8.12 Major shareholders

The shareholder structure at the date of the Prospectus is as follows (as it appears from the

notifications received by the Issuer):

Shareholders Number of shares % of total

De Wilg GCV* 2,000,000 12.08%

3D NV* 5,546,875 33.51%

The Issuer (Zenitel Norway AS) 113,113 0.68%

QuaeroQ CVBA 2,481,150 14.99%

Freefloat 6,413,284 38.74%

Total 16,554,422 100.00%

* Acting in concert

Each shareholder of the Issuer is entitled to one vote per share, irrespective of the proportion held in

the capital of the Issuer.

The Issuer has not issued any warrant, convertible obligation, option or any other right to subscribe

to existing or new voting securities.


Shareholders exercise their Non-Statutory Preferential Subscription Rights and can be summarised

as follows:

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3D NV² 5,546,875 33.51% 11,206,863 33.85% 16,654,080 50.30% 22,101,297 66.75%

De Wilg GCV² 2,000,000 12.08% 4,000,000 12.08% 3,000,000 9.06% 2,000,000 6.04%


QuaeroQ CVBA 2,481,150 14.99% 4,962,300 14.99% 3,721,725 11.24% 2,481,150 7.49%

Freefloat 6,413,284 38.74% 12,826,568 38.74% 9,619,926 29.06% 6,413,284 19.37%

Total 16,554,422 100.00% 33,108,844 100.00% 33,108,844 100.00% 33,108,844 100.00%





of their rights1





increase




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9. BUSINESS OVERVIEW

9.1 Introduction to the Issuer

9.1.1 Overview

Zenitel has established itself at the intersection of two domains - communication on the one hand,

security and safety on the other. Zenitel is active in instant audio and data communication. The main

characteristics of Zenitel’s products are based on speed, reliability and security. The application of

its products is often in life threatening and critical security environments.

Zenitel is organized into two key segments, each of which has a focus on, but is not exclusively

dedicated to, one of Zenitel’s key principal offerings: Secure Communication Systems (own

Intercom Products and Third-Party Products) and Caribbean (Network Services).

Zenitel is listed on the Euronext stock exchange in Brussels, with its statutory headquarters situated

in Belgium and its operational headquarters in Norway. Zenitel is represented in 18 countries:

Belgium, Brazil, Caribbean, China, Croatia, Denmark, Finland, France, Germany, the Netherlands,

India, Italy, Norway, Singapore, Sweden, United Arab Emirates, United Kingdom and the USA.

9.1.2 Issuer's history and development

Zenitel, is the result of the merger in May 2000 between SAIT RadioHolland, a provider of land and

marine communication equipment, and Stento ASA, a provider of internal communications and

security systems. Both of these businesses were themselves the product of a series of consolidations

in the intercom industry and radio equipment industry going back to the beginnings of electronic

communication.

SAIT-RadioHolland

SAIT-RadioHolland's history dates back to 1901 when a group of Belgian entrepreneurs founded

Compagnie Générale de Télégraphie sans Fil (CTSF), a venture supported by King Leopold II and

Guglielmo Marconi, the inventor of the wireless telegraph for long distance communication. After

World War II this business (then named SAIT Electronics-Société Anonyme Internationale de

Télégraphie) entered into several collaboration agreements with other companies including

RadioHolland NV. A long and successful partnership with RadioHolland eventually led to a merger

of the two businesses in 1992, which began trading under the name SAIT-RadioHolland.

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Stento ASA

Stento-ASA began in 1946 as Stentor Radiofabrikk, specializing in radio communication systems

for cargo ships and fishing boats and later extended its products to include intercom systems sold

under the brand name STENTOFON. In 1988, Stentor AS acquired VINGTOR Marine after a

successful eight-year cooperation with Vingmed AS to adapt the PAMEX platform and other on-

shore intercom systems for onboard ship communication. In 1997 Stentofon AS became Stento-ASA

when it merged with RingCom AS, a Norwegian supplier of internal communication systems and

Private Mobile Radio systems (itself the result of a merger in 1995 between Noracom, an MBO from

Motorola in 1993 and RingMaster, an early Norwegian pioneer in intercom systems). RingMaster

AS had a rich past in intercom systems itself. This company founded by Gustav Adolf Ring, Jr. in

1916 and then called Gustav A Ring AS, over several decades made significant pioneering

contributions in the development of intercom systems. In 1999, Stento-ASA acquired Steenhans, a

specialist in maritime communications and Philips CSS, the Communication and Protection division

of Philips.

After the merger in 2000 between SAIT-RadioHolland and Stento-ASA, both publicly traded

companies, the business went through a period of operational integration and rebranding, changing

its corporate identity to “Zenitel” in 2001.

Early 2009, in order to guarantee the profitability of the Group, especially given the global financial

and economic crisis, it was decided to focus all commercial efforts on the continuing development

of Secure Communication Systems as well as the Network Services in the Caribbean. As a result of

that the System Integration division operating in Belgium, Holland and France as well as the

Network Services in Belgium and Holland was divested.

In 2010, Zenitel moved its operational headquarters to Norway, while keeping its statutory

headquarters in Belgium.

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9.2 Group structure

The Group structure is as follows:

9.3 Principal activities

Zenitel offers comprehensive solutions that provide secure communications for marine vessels, off-

shore installations and on-shore facilities.

The Issuer’s approach is to offer tailored systems that meet specific customer requirements by

integrating components drawn from a broad range of own communication products and third-party

products. Over the past years Zenitel has streamlined its product portfolio, phasing out the

Ringmaster, M-100 and Asacom product lines and focusing on core development on the Stentofon

productline as well as introducing the new modern networked PA/GA solution Exigo.

Zenitel recognizes that different customers have different needs. Some are driven by cost, others on

particular features and still others on third-party integration or backward compatibility. SCS system

designers create solutions that exactly fit the needs of each customer, including:

- Incorporating special purpose features to fulfil unique customer needs.

- Meeting mandatory regulatory requirements.

- Supporting advanced features such as billing and entertainment delivery.

- Providing backward compatibility with established technologies such as analogue voice

systems.

- Enabling implementation of emerging technologies such as IP-based communications.

- Integrating with other security systems including data, voice, video and access control.

- Minimizing costs.

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Zenitel has a strong presence in both the off-shore (marine and oil & gas) and on-shore secure

communications market through its global brands, VINGTOR (off-shore) and STENTOFON (on-

shore). With its distributor network as well as local partners, Zenitel is able to target key market

segments.

- Zenitel is a global supplier of on-board communication systems for ships and off-shore

installations. Solutions and equipment are developed and marketed under the brand name of

VINGTOR. The name used to be a Norwegian company founded in 1946 that designed,

marketed and distributed radio systems. In 1988 the company was purchased by the

STENTOFON company, but the name VINGTOR has continued to evolve into a brand

offering extensive experience in the design, construction, installation and maintenance of

integrated marine communication systems. While VINGTOR is well established as a global

company in delivering on-board communications equipment to the marine market, an

increased focus on the Oil and Gas Industry has led to a specific target market within the

VINGTOR brand developing solutions for both fixed and floating installations. The brand

name is today used by the part of the Zenitel organisation serving the shipping industry.

Integrated voice and data communication systems from Zenitel are installed on more than

13,000 ships ranging in size from small patrol vessels, to bulk container ships, to oil tankers

and ocean liners. Zenitel products are type-approved and certified to comply with all major

marine regulations and codes required for on-board communications systems. VINGTOR

products range from battery less telephones required for emergency communications to

advanced IP-based audio systems and, increasingly, video surveillance systems.

VINGTOR products fall into the following broad categories:

- ACM Exchanges. Exchange-based systems for analogue and IP communications.

ACM exchanges may be integrated with all other systems offered by SCS and with

a wide range of third-party solutions. ACM Exchanges include software that enables

full system configuration.

- ACM Stations, Substations and Telephones. Analogue and IP-based terminals that

operate with the ACM platform to support end-user fixed and mobile

communications.

- VINGTOR Billing System. Software that enables the ship operator to bill crew and

passengers for specific communications system usage such as external telephone

calls.

- Telephone Gateways. Interfaces that connect the ACM E platform to external

analogue and GSM phone networks.

- Batteryless Telephone Systems (VSP). Systems that fulfil the requirement for

emergency communications between mission-critical stations on marine vessels.

- Pro700 Intercom Systems. Cost efficient intercom systems for ship board

communications among up to 40 intercom stations without a central exchange.

- Sound Reception Systems (VSS). Acoustic electronic navigation aids for hearing

environmental sound signals on closed-bridge vessels.

- Talk Back Systems. Command communication systems that enable all members of a

workgroup to coordinate their activities through shared conversations.

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- Public Address Systems (PA). Public address and general alarm systems for all

types of ships. In 2013 Zenitel launched a modern networked PA/GA system named

Exigo, but Zenitel also has a traditional PA system up to six zones.

- Wireless Paging Systems. Wireless notification system for mobile crew.

- Master Clock Systems. Synchronization systems for key shipboard functions.

- Entertainment Systems. Complete entertainment systems from naval TV and radio

satellite reception to on-board entertainment distribution.

- Local Area Network systems.

- IP Entertainment and TV systems.

- Zenitel’s on-shore products are principally sold under the STENTOFON brand name.

STENTOFON is a recognised brand for integrated security intercom communication

systems, particularly when special operations or special purpose stations are required. The

brand also has a reputation for providing flexible, reliable and superior quality, hands-free

communication systems. In recent years, whilst providing ongoing support for their

traditional analogue product, STENTOFON has implemented new IP products and

exchanges called STENTOFON AlphaCom E for first generation and Alphacom XE for

second generation. This new solutions are an evolution into IP technology while maintaining

full backwards compatibility for existing projects. This STENTOFON solution opens up

new opportunities and markets and has confirmed STENTOFON’s position as an

established brand name in the business. STENTOFON communications systems are

deployed in a broad range of facilities including amongst others office buildings, industrial

work sites, hospitals, prisons, metros and airports. STENTOFON products are designed and

manufactured to meet the critical needs of specific applications.

For example:

- Heavy duty industrial communications systems incorporate intercom substations with

extra-large buttons for use with work gloves, noise cancelling microphones to eliminate

the din of background machinery and ruggedized housings for dirty or outdoor

conditions.

- Operating room intercom stations include hygienic Mylar coated faceplates, chemical

resistant housings and pre-programmed buttons for instant contact with hospital

laboratories or radiology.

- Prison systems are implemented with vandal proof stainless steel substation covers,

built-in alarm and door lock capabilities and easy integration with video surveillance

systems.

STENTOFON products fall into the following broad categories:

- Alphacom XE platform. Exchange-based platform that supports and integrates the full range

of analogue, digital and IP-based communications technologies. Alpahcom XE exchanges

include software that enables full system configuration. Alphacom Stations, Substations,

Telephones and Control Room Solutions. Analogue and IP-based terminals that integrates

with the Alphacom E and XE platforms to support end-user fixed and mobile

communications. All IP stations have software that can be configured to SIP, Pulse or

Alphacom mode.

- Pulse: A serverless IP intercom system that enables up to 16 IP stations to create a system.

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- Turbine stations: In 2012 Zenitel launched a new set of station family to the market called

Turbine.

- Telephone Gateways. Interfaces that connect the Alphacom E platform to external analogue

and GSM phone networks.

- Microsoft OPC Interface. Interface developed to enable seamless integration with security

and building management systems.

- Pro 700 Intercom Systems. Cost efficient intercom systems for communications among up

to 40 intercom stations without a central exchange.

- Bi-Way Systems. Duplex systems for two-way conversations across security partitions.

- Exigo Public Address Systems. Public address systems for all types of facilities with one or

more announcement zones.

Zenitel is a corporate brand under which its WS (Wireless Systems) activities, primarily distribution

of Motorola products and Zenitel's own tunnel communication systems conduct their business. The

products include portable radios, mobile radios and pagers. The regional focus of Zenitel's Wireless

Systems business is Norway, Finland and Denmark.

In addition, to the three SCS (Secure Communication Systems) activities mentioned above, Zenitel

operates a public safety network in the Dutch Antilles (Caribbean) based on the TETRA standard.

ChuChubi is the brand name for equipment and services marketed on basis of this network, allowing

customers to use secure communication as a 'plug and play' service. This ChuChubi network is a

digital radio system especially developed for professionals having to rely on their communication

equipment (e.g. public safety).

9.4 Market overview

The Zenitel group is organized in two business units: Secure Communication Systems (SCS) and the

network business in Caribbean. The SCS unit consists of operations in Norway, Denmark,

Singapore, China, France, Finland, Italy, UK, Germany, Croatia, Brazil, USA, India, Middle-East

and a worldwide distributor network. The business in Caribbean consists of the TETRA network run

under the ChuChubi brand.

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The following table gives an overview of the products and services and of the allocation of each

legal entity to each segment. Profit for the years are allocated to each segment based on

management's primary business focus of each legal entity of the Zenitel Group:

Segment

Secure Communication Systems

Caribbean Mainly networks Curaçao, St. Maarten, Aruba, St. Eustatius

Location of servicing subsidiaries

Mainly own products (Intercom) and wireless

solutions

Norway, Denmark, Finland, Singapore,

USA, Italy, France

Products and services

(thousands of EUR) 31 December 31 December 31 December

2013 2012 2011

Belgium (Country of domicile) 0 0 0

Norway 29 777 26 146 26 026

Singapore 10 703 8 499 8 979

Denmark 7 356 8 468 10 398

France 5 446 6 289 5 396

Caribbean 5 071 5 864 4 946

USA 5 359 5 609 4 290

Other foreign countries 3 691 3 830 2 941

Total 67 403 64 706 62 977

Revenues from external customers attributed to subsidiaries in :

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The following table shows an analysis of the Group's revenue and results from operations by

reportable segment :

Segment revenue reported above represents revenue from external customers. Inter segment sales

amounted to € 0.1 million (2012: € 0.035 million and 2011: € 0.023 million).

The unallocated recurrent operating expenses in 2013, 2012 and 2011 consist of the costs included

in the support center Zenitel NV (holding costs). These costs relate to the operating expenses for

holding costs, such as publications, stock exchange, controlling, insurance, facilities, general

management and depreciation and amortization costs.

The following table shows an analysis of the segment assets and the segment liabilities of the Group:

Unallocated liabilities consist mainly of the group borrowings contracted by Zenitel NV and by

pension obligations and provisions related to reorganization and other risks and liabilities included

in Zenitel NV.

Revenue and assets are attributed to geographic area's based on the location of the servicing

company: Europe, Asia and Americas (USA and the Dutch Antilles).

(thousands of EUR)

Year ended 31 December 2013 2012 2011 2013 2012 2011 2013 2012 2011

Secure Communication Systems (SCS) 62 331 58 842 58 031 4 701 4 120 3 869 4 028 2 893 2 423

Caribbean 5 071 5 864 4 946 1 269 1 776 1 480 (274) 997 520

All Segments 67 402 64 706 62 977 5 970 5 896 5 349 3 755 3 890 2 943

Unallocated operations 0 0 0 (1 200) (1 217) (1 036) (640) (1 669) (1 442)

Total 67 402 64 706 62 977 4 770 4 679 4 313 3 115 2 221 1 501

Financial results (1 238) (1 244) (889)

Income tax expense (116) (94) (63)

Total Profit / (loss) for the period 1 761 883 549

EBITDA(1)

Segment result (2)

(1) EBITDA: earnings before interest & taxes, depreciation and amortization plus write-offs on current assets.

(2) The table above, the Segment result per segment comprises earnings before interest & taxes

Segment revenue

(thousands of EUR)

Year ended 31 December 2013 2012 2011 2013 2012 2011

Secure Communication Systems 34 159 34 924 34 574 17 895 18 000 16 204

Caribbean 3 206 4 696 5 262 1 713 2 446 3 536

Unallocated 406 1 410 1 385 11 279 12 739 15 620

Consolidated 37 771 41 031 41 221 30 887 33 185 35 360

Assets Liabilities

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The following table gives an overview of the revenue and assets per geographical area :

9.4.1 Secure Communication Systems

Zenitel is a global supplier in markets for critical audio communication systems, particularly

sophisticated communication systems on-board commercial ships and in public and industrial

facilities. These niche markets are characterized by a need for fast, reliable and secure

communications in environments where human lives or high-value assets are at risk. The customers

in these markets are spread across diverse industries but share safety and security requirements for

certainty of communication that justify the cost of sophisticated, highly reliable equipment. These

customers also require a high level of specialized know-how and product customization, which

differentiates them from the mass market for communication equipment. These niche characteristics,

the heterogeneous nature of this set of customers, and the specialized distribution network needed to

access them, create high entry barriers for potential new participants in the market for critical

communication systems.

In general, Zenitel is organized along three distinct market segments - Marine, On-shore and

Wireless applications - each of which targets different industry verticals, geographies and end-

customers. The Issuer’s strategy is to capitalize on both its knowledge of the specialized needs of

these three specific markets and its well-developed sales & distribution network to gain access to

these markets.

Due to the project nature of the Issuer's on-shore segment, an important portion of revenues usually

comes from a few large projects each year. Although these individual customers may not return each

year, large projects are an ongoing part of the on-shore business.

(thousands of EUR)

Year ended 31 December 2013 2012 2011 2013 2012 2011

Europe 46 270 44 734 44 762 27 404 29 109 30 402

Asia 10 703 8 499 8 979 5 561 5 283 4 710

Americas 10 431 11 473 9 236 4 806 6 638 6 109

Consolidated 67 404 64 706 62 977 37 771 41 030 41 221

Revenue from

external customers

Segment assets

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a. Marine market and oil & gas

Zenitel is a supplier of mission critical communication systems for on-board communication on

commercial vessels including bulkers, tankers, off-shore vessels, and container ships and to a lesser

extent cruise liners and other specialized vessels such as RORO and ROPAX. Its products are

suitable for almost all commercial vessel classes and are “type-approved” by all major international

nautical classification societies. Zenitel sells its products via specialized distributors, mostly

installation companies or distributors of navigation systems to shipyards and has market leading

positions in some of the world’s main shipbuilding regions including Europe (biggest competitors

are Gitiesse, Phontech, Hanshin and MRC), Singapore (biggest competitor is Phontech) and China

(biggest competitors are MRC, Hanshin, Gitiesse, Phontech and a set of local Chinese companies).

Products from Zenitel are built to support the entire 20 to 30-year lifecycle of a commercial vessel;

therefore demand is predominantly driven by new builds. Given the long lifecycle and robustness of

its products, Zenitel guarantees full backward compatibility of product advancements in order to be

able to continue supplying its large installed base. Currently Zenitel also derives some revenue from

aftermarket demand, although the recent technological evolution from analogue to VoIP products is

creating substantial revenue opportunities for both retrofit programs and aftermarket services for its

existing installed base of systems on over 13,000 vessels.

Zenitel has also established itself as a provider of communication systems to both the on-shore as

well as the off-shore market of oil & gas. Zenitel delivers the same type of equipment as it does for

the Marine segment, but have been successfully installing Tetra and analogue radio systems to major

customers like Statoil, Shell and Conoco-Philips. Zenitel won the frame agreement to deliver

analogue radio systems and terminals to Statoil in 2012. In addition Zenitel won in 2013 the frame

agreement to deliver the PA/GA solutions to Statoil based on Exigo for the four coming years with

an option for two additional periods of two years.

The global shipbuilding industry has undergone a major geographical shift over the past three

decades, moving main production activities from north-western Europe, historically the centre for

commercial shipbuilding, to East Asia. Today, South Korea, China, and Japan are the world’s most

important shipbuilding hubs focusing on high volume commercial vessels including tankers, bulk

carriers and container ships, whose construction is particularly labour and capital intensive. China is

forecast to be the world’s biggest shipbuilder by 2015. European shipyards remain strong in niches

for more sophisticated vessels such as small ships, passenger ships and specialized ships. South

Korea and Japan continue to be fairly protected markets with respect to new builds and component

supply. Zenitel has access to the South Korean market through a local distributor, supplying systems

to more sophisticated vessels only. In terms of the ownership structure of the current world fleet, the

two most important regions are Europe and Asia. This existing base represents a significant but still

unexploited aftermarket sales opportunity for Zenitel. The Issuer is also well positioned for future

growth, having a strong foothold in the important Asian and European shipbuilding regions.

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b. On-shore market

Zenitel’s products for on-shore applications are designed to enable fast, reliable and secure

communication in demanding environments within public and industrial facilities such as hospitals,

police and fire stations, airports, subway and train stations, prisons, schools, parking garages, banks,

sports stadiums, military facilities and factories. Like its activities in the marine sector, SCS uses

distributors to access its global customer base. The Issuer’s most important geographic markets are

Europe, North America, Middle East and China, which have experienced increased demand for

security systems over the past years. Zenitel has also experienced increased interest for its products

from the Latin-American market, and has established sales channels. Zenitel’s on-shore sales

activity has benefitted from a number of favourable trends over the past years within its four main

industry verticals: building security, healthcare, prisons & police and industry, transportation &

infrastructure.

Building Security

The Issuer’s secure communication systems for buildings range from emergency phones for

elevators to intercom systems in security control rooms. They are part of the security management

solutions for facilities such as high-rise buildings, government buildings, sport stadiums, or park

houses, alongside other electronic communication systems such as access control, video surveillance

and alarm systems. These systems can be installed and operated independently from each other, or

can be fully integrated and operated remotely to form one universal security management platform.

Integrated security systems generally provide higher utility for customers, offering more effective

communications, higher levels of security, and lower installation and operating costs than

traditional, separately operated systems. Increased public concern over crime and terrorism has led

to a sharp rise in demand for reliable security systems for public facilities and high-rise buildings,

resulting in a clear trend towards integrated security systems. Management believes that Zenitel will

benefit significantly from this trend, particularly since its current generation of IP-based products are

designed to be integrated with the other wired and wireless communication and security devices are

needed to provide a total security solution. Moreover, other factors such as rising government

budgets for homeland security and new regulations stipulating more rigorous security systems for

the public space will drive the Issuer’s growth going forward.

Prison & Police

Zenitel provides solutions that meet the specific security and communication demands of

correctional facilities and police stations around the world. These systems are required to function at

any time and under any conditions and must allow for the integration of different layers of

communication and security systems, an area where Zenitel has significant expertise. Its products

feature special properties such as alarm functions or scream based functions that are vandal proof

and particularly suited for applications in correctional facilities. The growth of this market segment

essentially depends on the number of newly built facilities as well as the need for enhanced security

and communication systems based on changes in legal regulations.

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Transportation & Infrastructure

Zenitel’s products also enable critical communication in airports, railways, industrial facilities,

power plants, shopping malls and other public locations. These facilities require a maximum level of

security and reliability from their communication systems and, in addition, need integration with

other systems such as mobile radio systems, video monitors and alarm systems. Airports and railway

stations are the Issuer’s predominant areas of application within this industry vertical as they

represent the biggest market for its products and have the most attractive growth characteristics

going forward.

Healthcare Market

In healthcare, the availability of fast, secure and reliable communication can be a matter of life or

death. Zenitel’s intercom products find many applications in hospital and healthcare environments

and are used in operating theatres, patient rooms, treatment facilities, storage areas, administrative

offices, halls, lifts, etc. The Issuer’s products feature special properties such as chemical resistance

and sterile housings that are particularly suited for applications in hospitals. The market for Zenitel’s

products in this vertical is primarily driven by the growing number of newly built hospitals in

emerging countries and by the shift from in-patient settings to ambulatory clinics in developed

countries. Through its accumulated expertise in communication equipment for hospitals, Zenitel is

able to benefit from both trends.

c. Wireless Systems

The Wireless Systems business is focused on value-added integration and reselling of third-party

radio equipment mainly for use by market segments such as public safety & security, industry,

public and private transport, utilities and authorities in settings such as highway tunnels, metro

systems, parking garages and similar environments where it is difficult to maintain a radio signal

without special communication infrastructure. The Issuer’s core competence in this segment is

customizing systems to the exact requirements of their end-customers. Unlike the marine and on-

shore segments, where the Issuer primarily sells proprietary products, in the wireless business

Zenitel makes use of third-party equipment, mostly from Motorola. These products include portable

radios, mobile radios and pagers. The Issuer covers the Norwegian, Danish and Finnish markets and

competes against TC-Connect, Datamatik, Cassidian and Sepura.

9.4.2 Caribbean

Within the Dutch Antilles Zenitel is the main radio communication supplier in many professional

market segments. From public safety, logistics, to hospitals and hotels, all users rely on Zenitel for

their communication.

Zenitel offers a digital radio system with island coverage (TETRA). This ChuChubi system is a

digital radio system especially developed for professionals who have to rely on their communication

equipment. The redundant network is designed and built to operate under heavy conditions (during

power failures, storms, flooding and extreme high usage).

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Advantages of the TETRA ChuChubi Trunking System:

improved sound quality;

better battery and more efficient energy usage (longer operational time);

more channels / talk groups per customer available; no extra frequencies needed;

every radio has unique ID: display shows caller ID or name;

send and receive text messages, emails;

emergency calls, private calls, group calls and broadcast calls;

build in GPS for Tracking and Tracing;

link radios to the telephone switch;

no scanners available for consumers (no eavesdropping).

The TETRA ChuChubi network has repeater sites on several key locations on all islands. The radios

work in Trunking Mode, which means that all radios can contact each other anywhere on the island.

The network is redundant and has its own backup power supplies. The sites are connected in a

redundant microwave ring, leaving the network work independently and 100% managed by Zenitel.

Zenitel offers 24/7 support for all equipment and the network is constantly monitored to prevent

outages.

9.5 Strategy

The overall growth strategy of Zenitel can be described as follows:

The Secure Communication Systems business focuses on the development and marketing of

Zenitel's own products and brands. The STENTOFON, VINGTOR and ZENITEL brands are well

established and recognized in the industry. They serve specific market segments for instant audio

and data communication. In 2013, Zenitel continued investing in the development of new products

and solutions which resulted, among others, in the launch of Exigo, its new advanced networked

Public Address & General Alarm system. Exigo, based on native IP technology, is an advanced,

scalable system specifically designed to meet the demands and needs of Public Address & General

Alarm for a variety of applications and environments. These products have been very well received

in the market, providing a solid basis for further product range extension and additional product

features in the future.

STENTOFON:

Zenitel aims to be amongst the top 3 providers of high quality audio solutions in the

Building Security, Infrastructure & Industry markets worldwide;

Zenitel continues to develop its existing and new distribution channels and delivery

capabilities in selected key markets to increase market share for existing and new IP

products;

Zenitel introduces its new networked PA system into its current and new distribution

channels.

105

VINGTOR:

Zenitel aims to be the worldwide market leader in critical on-board internal communication;

Zenitel extends its direct presence in fast growing markets (e.g. BRIC countries);

Zenitel continues to expand its product offering with new innovative products to current and

new customers;

Zenitel enters into the oil & gas segment with its current portfolio and the new networked

PA system.

In the Caribbean, Zenitel's focus is to offer additional services to the existing customer base in order

to increase the average revenue per network user as well as to keep its current customers connected

to the network.

While the strategic focus has shifted more towards growth, Zenitel is cautious in ensuring that this

growth remains profitable. In order to do so, operating expenses are closely monitored and kept to a

strict minimum.

9.6 The Issuer's competitive strengths

Zenitel’s competitive strengths, amongst others, are:

a world-wide distribution network, based on loyal and long term relationships, with a high

technical competence level;

a well-diversified installed base in the different market segments, providing the

fundamentals for further growth;

a continued focus on Research & Development based on in-house software development;

existing IP and Quality assurance certificates;

focus on innovation, e.g. the new networked Public Address & General Alarm platform

(Exigo);

loyal and skilled workforce;

the possibility to offer an integrated solution with audio, data and radio competences;

a continued focus on optimising the design of the hardware devices to fulfil the customer

demand;

in the Caribbean, Zenitel has a stable customer base.

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9.7 Principal investments

Zenitel's principal investments are mainly plant and equipment, capitalised development, software

and licences. Zenitel will continue investing in the development of new products and solutions as

well as upgrading existing products.

Property, plant and equipment

Land is carried at cost less accumulated impairment losses. All other property, plant and equipment

are carried at cost less accumulated depreciation and impairment losses except for property, plant

and equipment under construction which is carried at cost less accumulated impairment losses. Cost

includes all directly attributable costs of bringing the asset to working condition for its intended use.

107

Depreciation is charged so as to write off the cost or valuation of assets, other than land and

properties under construction, over their estimated useful lives, using the straight-line method to

their estimated residual value. The depreciation is computed from the date the asset is ready to be

used.

The estimated useful life, residual value and depreciation method of an asset is reviewed at least at

each financial year-end and, if expectations differ from previous estimates, with the effect of any

changes in estimate accounted for on a prospective basis.

The following useful lives are applicable to the main property, plant and equipment categories:

Industrial buildings: 40 years

Office buildings: 50 years

Machine tools and heavy equipment: 10 years

Network infrastructure: 7-10 years

Electronic measuring appliances: 5 years

Quality control appliances: 10 years

Workshop and laboratory equipment: 4 years

Furniture in industrial buildings: 10 years

Vehicles - cars: 4-5 years

Vehicles - trucks: 4 years

Office furniture: 10 years

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as

appropriate, only when it is probable that future economic benefits associated with the item will

flow to the Group and the cost of the item can be measured reliably. All other repairs and

maintenance are charged to the consolidated statement of profit or loss during the financial period in

which they are incurred.

The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is

determined as the difference between the sales proceeds and the carrying amount of the asset and is

recognized in profit or loss.

The disposal of other tangible assets mainly relate to assets in the Caribbean.

109

Computer software development costs

Generally, costs associated with developing or maintaining computer software programs are

recognized as an expense as incurred. However, costs that are directly associated with identifiable

and unique software products controlled by the Group that have probable economic benefits

exceeding the cost beyond one year, are recognized as assets. Direct costs include staff costs of the

software development team and an appropriate portion of relevant overheads that are necessary to

generate the asset and that can be allocated on a reasonable and consistent basis to the asset.

Computer software costs that have been capitalized are amortized on a straight-line basis over the

period of their expected useful lives, not exceeding a period of five years.

Internally generated intangible assets - Research and development expenditure

Expenditure on research activities, undertaken with the prospect of gaining new scientific or

technical knowledge, is recognized in the consolidated statement of profit or loss as an expense as

incurred.

Costs incurred on development projects (relating to the design and testing of new or improved

products) are recognized as intangible assets when the asset can be clearly identified, when the

development costs can be measured reliably and to the extent that it is probable that the asset created

will generate future economic benefits. Other development expenditures are recognized as an

expense as incurred. Development cost previously recognized as an expense is not recognized as an

asset in a subsequent period. Development costs that have been capitalized are amortized from the

commencement of the commercial production of the product on a straight-line basis over the period

of its expected benefit. The amortization periods adopted do not exceed five years.

The expensed research and development costs were in 2013 € 2.3 million, in 2012 € 2.0 million and

in 2011 € 1.9 million. Out of these expensed costs € 1.6 million in 2013 (€ 1.6 million in 2012 and €

1.8 million in 2011) were included in the Employee benefits expense (wages and salaries). Besides

these expensed research and development costs, € 1.1 million were capitalized in 2013 (€ 0.9 million

in 2012 and € 0.7 million in 2011).

9.8 Trends

The major trend is to increasingly use the IP technology as a platform and back bone. IP is an open

architecture that easily integrates one product with others. A modern security system usually

integrates video, access control and audio. The integration can be done in a cost efficient way via

software.

Analogue technology is still less expensive than IP technology. As a consequence, many customers

continue to buy analogue products. We see this for both in on-shore and off-shore markets.

Another trend is to have an open architecture that easily integrates various products. The software on

Zenitel's stations can also be used in different modes, in order for the customers to choose the mode

that fits best.

110

Zenitel developed and delivered the first IP exchange in 2005 and its IP stations in 2006. Since then

Zenitel has continued to develop modern IP solutions. Last year Zenitel introduced the first fully

networked PA solution in the market, and will continue to develop and deliver modern products for

both the Intercom and the PA market.

9.9 Significant change on Issuer's financial or trading position

There are no significant changes to mention.

9.10 Offices

BELGIUM

Zenitel NV (Head Office)

Z.1 Research Park Zellik 110

BE-1731 Zellik

Tel. +32 2 370 53 11

Fax +32 2 370 51 19

[email protected]

BRAZIL (Branch)

Zenitel Marine Brazil

Rua Florianopolis

1360 Bloco 1 Apt. 207

Praça Seca - Rio de Janeiro

Cep 21321-050

+55 21 8440 9665

[email protected]

CARIBBEAN (CURAÇAO)

Zenitel Caribbean BV

Schottegatweg Oost 10

Bon Bini Business Center

Unit J, 1st floor

Curaçao

Tel. +599 9 737 2477

Fax +599 9 737 1651

[email protected]

CARIBBEAN (SINT-MAARTEN)

Zenitel Caribbean BV

Professional Office park

Osprey Drive Building 1

Unit 1a

Philipsburg, St. Maarten

Tel. +599 542 5414

Fax +599 542 2589

[email protected]

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CARIBBEAN (ARUBA)

Zenitel Aruba NV

Ahmo Plaza

Av. Don Milio Croes 106

P.O. Box 2020

Oranjestad, Aruba

Fax +599 9 737 1651

[email protected]

CROATIA

Zenitel Marine Med.

Put Brace Honovica 6

HR-51414 Icici/Opatija

Tel. +385 51 29 19 10

Fax +385 51 29 25 55

[email protected]

DENMARK

Zenitel Denmark AS

Park Allè 350A

DK-2605 Brøndby

Tel. +45 43 43 74 11

Fax +45 43 43 75 22

[email protected]

FINLAND

Zenitel Finland Oy

Olarinluoma 14

02200 Espoo, Finland

Tel: +358 20 7792270

Fax: +358 20 7792271

[email protected]

FRANCE

Zenitel CSS France SA

Parc d’activité du Petit Nanterre

6 rue des Marguerites

FR-92737 Nanterre cedex

Tel. +33 1 47 88 50 00

Fax +33 1 43 34 50 21

[email protected]

GERMANY

Zenitel Marine Germany

Langeoogstraße 6,

DE-26603 Aurich

Tel. +49 4941 6976 720

Fax +49 4941 6976 715

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INDIA(branch)

Zenitel India

#6, Lottegolla Halli

RMV II Stage

Bangalore 560 094

India

Tel: +91-80-2341 1629

Tel: +91-80-2351 1897

ITALY

Zenitel Italia SRL

Via dei Lavoratori 17

IT-20092 Cinisello Balsamo MI

Italy

Tel. +39 02 66 59 00 20

Fax +39 02 61 24 71 10

[email protected]

THE NETHERLANDS

Zenitel Finance Netherlands BV

Microfoonstraat 5

NL-1322 BN Almere

P.O. Box 30350

NL-1303 AJ Almere

Tel. +31 36 54 62 600

Fax +31 36 54 62 601

NORWAY

Zenitel Norway AS (Oslo)

AS Sandakerveien 24C, Entrance D9

P.O. Box 4498 Nydalen

NO-0473 Oslo

Tel. +47 40 00 25 00

Fax +47 22 37 85 32

[email protected]

Zenitel Norway AS (Horten)

Bromsveien 17,

3194 Horten

Tel: +47 40 00 25 00

Fax: +47 33 03 16 61

Zenitel Norway AS (Trondheim)

Ingvald Ystgaards vei 3A,

7047 Trondheim

Tel: +47 40 00 25 00

Fax: +47 73 90 53 90

[email protected]

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SINGAPORE

Zenitel Marine Asia Pte. Ltd.

15 Tai Seng Drive #05-02

SG-535220 Singapore

Tel. +65 63 83 0200

Fax +65 63 83 0700

[email protected]

UNITED ARAB EMIRATES (branch)

Zenitel Norway AS JLT Branch

Office Suite #13

33rd Floor, HDS Tower

PO Box 487282

Jumeirah Lake Towers

Dubai, UAE.

USA

Zenitel USA, Inc.

6119 Connecticut Ave.

Kansas City, MO 64 120

Tel. +1 816 231 7200

Fax +1 816 231 7203

[email protected]

9.11 Environment

All Zenitel products are produced according to environmental standards such as RoHS and other

European Directives as well as Waste Electrical and Electronic Equipment Directives. Zenitel also

complies with the IMO resolution (A.962 Clean Design/GreenPassport) by documenting all

materials in a vessel’s construction that may be hazardous to humans or the environment.

We refer to section 9.16 "Legal and arbitration proceedings" for a legal proceeding with respect to

environment.

9.12 Research and development

The majority of the products developed by Zenitel are designed in Norway. Zenitel has a

development organization in Oslo with experts within software, hardware and mechanical design. In

addition Zenitel has product managers on different sites around the world that are responsible for

different product lines. In 2013 Zenitel also established a new software centre in Zenitel's office in

Croatia.

Zenitel has a roadmap for its two major product lines: Intercom and Public Announcement. These

product lines will be the drivers also for the coming years. The main focus for all Zenitel's resources

is development of new products, but Zenitel also uses part of them for product maintenance.


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The expensed research and development costs were in 2013 € 2.3 million, in 2012 € 2.0 million and

in 2011 € 1.9 million. Out of these expensed costs € 1.6 million in 2013 (€ 1.6 million in 2012 and €

1.8 million in 2011) were included in the Employee benefits expense (wages and salaries). Besides

these expensed research and development costs, € 1.1 million were capitalized in 2013 (€ 0.9 million

in 2012 and € 0.7 million in 2011).

9.13 Intellectual property

The available intellectual property relates to the main trademarks as described below:

STENTOFON - The preferred solutions and systems provider for the On-shore

secure communications market with advanced, leading-edge equipment.

VINGTOR - Global leader in communication solutions for the Marine market, now

encompassing the Oil and Gas industry.

CHUCHUBI - The Caribbean ChuChubi network offers a range of features and

benefits providing voice, data and GPS for an optimal communication system.

ZENITEL is a corporate brand under which Zenitel's subsidiaries conduct their

business.

A

115

9.14 Competition

9.14.1 Off-shore

Zenitel holds leading market positions in its primary geographic markets, sharing its niche with a

small number of global and local competitors. The Issuer is the #1 supplier of on-board internal

communication systems worldwide. Zenitel’s competitive advantages include its strong distributor

relationships, technological expertise and decades of experience with customer and regulatory

requirements, setting it apart from local competition in Europe and more importantly in East Asia.

Many local market participants, particularly in China, represent a limited threat to the Issuer, since

they lack the necessary technological expertise and type-approvals for vessels used in international

waters.

Company Description

Marine Radio Co. Ltd. (MRC) Marine Radio Co. Ltd. (MRC) was established in 1961 in Busan,

Korea. MRC manufactures internal communication and

broadcasting equipment for marine applications, such as public

address systems, auto telephone systems, talk-back systems, marine

clock systems, and communal aerial systems for several kinds of

vessels. MRC occupies around 75% of the Korean shipbuilding

market, and exports internal communication systems to Japan,

China, Taiwan, Singapore, Vietnam, India, and countries in the

Middle East. MRC, located in Busan, is composed of 3 factories

with 115 employees.

Cooper Gitiesse Italy-based Gitiesse manufactures multimedia communication

systems for ship use under the brand IMCOS (Integrated

Multimedia Communication System). Its products include general

& fire alarm, public address, ship service intercoms, automatic

telephones, radio & TV signals distribution network, surveillance

CCTV, engine room signal columns, computer data network and

other communication options. The company was acquired by

Cooper Industries some years ago.

Jotron Phontech Norway-based Phontech offers voice communication systems for

the marine market. Its product line includes intercoms, batteryless

telephones, digital communication systems, public address systems

and sound reception systems. The company serves merchant ships,

fishing vessels, tug boats, off-shore supply vessels and different oil

and gas off-shore constructions. The company was merged into

Jotron Group a couple of years ago.

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9.14.2 On-shore

Besides many local competitors, Zenitel shares the market for on-shore secure communication

systems communication systems with a small number of international competitors.

Company Description

Direct competitors

Aiphone Japan-based Aiphone manufactures intercom systems for a wide

range of applications. The company serves many security markets,

including commercial, correctional, educational, government,

healthcare and residential.

Commend International

GmbH

Austria-based Commend supplies intercom systems worldwide.

The company offers intercom terminals, control systems, intercom

server and packages & add-ons. It serves the security, emergency,

medical, parking, industrial, mass transit and building sectors.

Niche Competitors

Code Blue Corporation US-based Code Blue Corporation develops voice security systems.

It offers a set of communication devices and system components,

which provide interactive voice solutions, such as cellular, IP

wireless, RF wireless, and VoIP.

Talk-a-Phone Co US-based Talk-A-Phone Company is a communications

manufacturer providing emergency phone systems, area of rescue

systems, commercial intercom systems, and mass notification

systems.

Select Indirect Competitors

Alcatel-Lucent Enterprises

Division

France-based Alcatel-Lucent Enterprises division provides voice,

data, and video communication solutions for businesses, the

industry, and the public sector. It offers business critical

communications solutions, including security applications such as

CCTV, intrusion detection, and network security.

Avaya Inc. US-based Avaya, Inc. supplies enterprise communications solutions

and related services to businesses and organizations internationally.

It provides solutions for IP telephony, unified communications,

contact centers, and communications-enabled business process, as

well as offers secure communications for public safety, banks,

healthcare organizations, and businesses.

Cisco Systems Inc. US-based Cisco Systems, Inc. designs, manufactures, and sells IP-

based networking and other products relating to the

communications and information technology industry worldwide.

Digital Acoustics Corporation US-based Digital Accoustics designs and manufactures speech,

data, and semiconductor technology solutions. It offers IP ethernet

intercoms and paging, desktop/wall mount integrated IP intercoms,

OEM board level IP products, and softwares.

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Bosch Communications

Systems

Bosch Communications Systems - a business unit of Bosch

Security Systems - is one of the world's leading manufacturers and

suppliers of professional audio, wireless, life safety and

communication equipment. Bosch Communications Systems offers

complete system solutions for the world's most critical, high-profile

installations and events.

Industronic An international high-tech company based in Wertheim, Germany,

Industronic is a world class provider of industrial communication

systems. Industronic offers worldwide customer support with a

network of around 50 certified partners and representatives as well

as subsidiaries in China and the USA.

9.15 Human Resources

As of 31 December 2013 the total number of employees of the Group amounted to 270, of which 31

employees relate to the Caribbean network business.

FTE by country

USA 19

France 18

Italy 3

Norway (1) 103

Brazil 2

Croatia 20

Germany 2

India 3

Netherlands 2

Singapore 29

Finland 11

Denmark 24

Caribbean (2) 31

Belgium 3

United Arab Emirates 1

(1) Norway, (Headquarters): Horten: 46, Oslo: 53, Trondheim: 4.

(2) Caribbean: Aruba: 4, Curacao: 20, Sint-Maarten 7.

9.16 Legal and arbitration proceedings

During the normal course of business, Issuer and its subsidiaries are party to some legal claims and

complaints, mostly related to Zenitel’s divested businesses, resulting in contingent liabilities with

uncertainty on timing, outcome and/or amount. These contingent liabilities relate to possible

obligations with respect to old projects, soil contamination, warranties given and redundancies:

A legal case is pending in Greece whereby a customer claims compensation for

underperformance. Zenitel disagrees.

A former employee of Zenitel Belgium NV started a legal case against Zenitel Belgium NV

in 2005 claiming unlawful dismissal. Zenitel Belgium NV in return claims compensation for

breach of the employment contract and unlawful departure.

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In 2000 Zenitel sold its former site in Uccle. The Brussels Institute for Environmental

Management (BIM) is of the opinion that Zenitel has not complied with its obligations arising

from the termination of its activities. Zenitel believes that it cannot be considered to have a

clean-up obligation. Beginning of 2014 Zenitel received a new notice from BIM ordering it to

carry out a detailed soil survey due to its assumed liability for the pollution. Zenitel is

currently considering taking judicial action against this notice.

NRSFRANCE S.A., a Zenitel subsidiary in liquidation, was summoned by a previous

consortium partner in relation to the implementation of a commercial agreement. As

NRSFRANCE S.A. is in liquidation, legal proceedings were initiated against NRSFRANCE

S.A. as well as against Zenitel. NRSFRANCE S.A. and Zenitel reject these claims.

The total amount of provisions for these legal proceedings is € 3.1 million. The outcome remains

uncertain in terms of judgment, timing and amounts. The board of directors considers these provisions

to be adequate.

9.17 Material contracts

There are no material contracts to mention.

9.18 Information on holdings

Please refer to section 9.2 "Group structure".

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10. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

10.1 Overview

For an overview of consolidated key figures and alternative performance measures, please refer to

section 3.1 "Selected financial information".

10.2 Analysis of consolidated income statement

120

By applying the IAS 19R revision per 31 December 2012, the Issuer classified the net periodic

pension cost in operating and financing activities for their respective components and reclassified the

accumulated 2012 actuarial gains and losses to the retained earnings. Total impact of this revision was

€ 0.2 million. This had an impact only for the adoption of the revision of IAS 19 (IAS 19R) on

Employee Benefits and more specifically on post-employment benefits. Also IAS 19R required a

retrospective application, meaning that the year 2012 has been restated for 2013 reporting and

comparison purposes. Where applicable, 2012 figures have been restated in the tables. The major

changes introduced in the IAS 19R relate to the recognition of actuarial gains and losses through

Other Comprehensive Income (equity) and the alignment of expected return of assets to the discount

rate.

Analysis 2013-2012 :

Revenue amounted to €67.4 million in 2013. This represents a growth of €2.7 million or 4.2%

compared to 2012. The SCS revenue increased by 5.9% to €62.3 million and the revenue of the

Caribbean network operation declined by 13.5% to €5.1 million.

Operating profit amounted to €3.1 million compared to €2.2 million in 2012. The strong increase of

€0.8 million or 40% is due to increased revenue and reduced depreciation and impairments.

The net financial expense amounted to €1.2 million, being the same level as the previous year.

121

The total consolidated profit of the year for the Zenitel Group shows a profit of €1.8 million, against

€0.9 million in 2012. Profit of the year per share, after corrections for treasury shares, amounted to

€0.11 in 2013 against €0.05 in 2012.

Analysis 2012-2011 :

Revenue amounted to €64.7 million in 2012. This represents a growth of €1.7 million or 2.7%

compared to 2011. The SCS revenue increased by 1.4% to €58.8 million and the revenue of the

Caribbean network operation increased by 18.6% to €5.9 million.

Operating profit amounted to €2.2 million compared to €1.5 million in 2011.

The net financial expense amounted to €1.2 million compared to €0.9 million in 2011. The increase of

the net financial expenses by €0.3 million is mainly explained by a realized gain of €0.2 million on

the sale of financial assets in 2011 and an increase of the net foreign exchange losses by €0.2 million

in 2012.

The total consolidated profit of the year for the Group shows a profit €0.9 million, against €0.5

million in 2011.

Profit of the year per share, after corrections for treasury shares, amount to 0.05 in 2012 against 0.03

in 2011.

10.3 Analysis of consolidated balance sheet

123

Analysis 2012-2013:

Total assets amounted to €37.8 million, a decrease of €3.3 million compared to 2012.

Property, plant and equipment amount to €1.9 million, down €1.2 million compared to the previous

year, due to normal depreciations and disposals. Goodwill decreased to €3.8 million, due to the

foreign currency translation impact. Other intangible assets increased to €2.2 million and consisted of

increased capitalized development costs. Deferred taxes amounted to €2.3 million, a decrease of €0.3

million due to the foreign currency translation impact. Long term financial assets decreased by €0.5

million to €0.5 million. The decrease is mainly explained by received payments relating to divested

activities in 2009.

Inventories amount to €6.8 million, a decrease of €1.0 million from the previous year. Contracts in

progress increased by €0.5 million to €1.3 million.

Trade and other receivables amount to €14.6 million, an increase of €1.1 million compared to the

previous year.

124

Shareholders’ Equity totals €6.9 million, a decrease of €1.0 million after a negative impact from

exchange differences arising from translation of foreign operations of €2.8 million. The equity ratio

decreased to 18.2% from 19.1%. The extraordinary shareholders’ meeting of 1 October 2013

decreased the Zenitel's share capital, the share premium and the reserves to offset the losses carried

forward from the financial statements of Zenitel NV. The impact is shown in the above consolidated

statement of changes in equity of the Group per 31 December 2013.

Total non-current liabilities decreased from €7.2 million to €3.6 million. The decrease is the result of

loan and pension payments in 2013, and the shift from long term to short term of an important part of

the long term borrowings and pension liabilities.

Total current liabilities increased by €1.2 million to €27.2 million in 2013. Trade and other payables

amount to €16.6 million, a decrease of €0.3 million. Short term borrowings increased by €2.2 million

to €6.5 million. Total long term and short term borrowings decreased from €9.9 million to €9.4

million, which is explained by the loan repayments made in 2013. Short term provisions decreased

from €4.0 million to €3.7 million.

The board of directors has evaluated the net book value of capitalized development costs, the net book

value of the network investments, positive consolidation differences, deferred tax assets, contracts in

progress and restructuring and other provisions, and is of the opinion that the amortizations and

provisions are sufficient.

Analysis 2011-2012:

Total assets amounts to €41.0 million, a decrease of €0.2 million compared to 2011.

Property, plant and equipment amount to €3.1 million, down €0.5 million compared to last year, due

to normal depreciations.

Goodwill increased slightly to €4.4 million, due to the foreign currency translation impact.

Other intangible assets increased from €1.5 million to €1.9 million and consist mainly of increase of

capitalized development costs.

Deferred taxes amount to €2.6 million. The increase is mainly due to the foreign currency translation

impact.

Long term financial assets decreased by €0.2 million to €0.9 million. The decrease is mainly

explained by received payments for proceeds receivable relating to sold activities in 2009.

Inventories amount to €7.8 million, an increase of €0.9 million from last year. Contracts in progress

decreased by €0.2 million to €0.8 million.

Trade and other receivables amount to €13.5 million, a decrease of €1.3 million compared to previous

year. The reduction is mainly explained by payments for projects in Denmark and a slower Q4 sales

in 2012 compared to 2011.

125

Shareholders’ Equity totals €8.0 million, an increase of €2.1 million or 36.6%. The Equity ratio

increased from 14.2% to 19.5%

Total non-current liabilities decreased from €9.8 million to €7.0 million. The decrease is the result of

the loan and pension payments in 2012, and shift from long term to short term of an important part of

the long term borrowings and pension liabilities.

Total current liabilities increased with €0.5 million to €26.0 million in 2012. Trade and other payables

amount to €16.9 million, a decrease of €0.4 million. Short term borrowings increased with €0.3

million to €4.3 million. Total long term and short term borrowing decreased from €11.5 million to

€9.9 million, which is explained by the loan repayments done in 2012. Short term provisions

increased from €3.7 million to €3.9 million. The increase is mainly explained by a transfer between

short and long term provisions.

The board of directors has evaluated the net book value of capitalized development costs, the net book

value of the network investments, positive consolidation differences, deferred tax assets, contracts in

progress and restructuring and other provisions, and is of the opinion that the amortizations and

provisions are sufficient.

126

10.4 Analysis of consolidated cash flow statement

127

Analysis 2012-2013:

Net cash generated from operating activities amounted in 2013 to € 3.6 million compared to € 6.0

million in 2012. The expensed development costs increased in 2013 to € 2.3 million versus € 2.0

million in 2012. Depreciation and amortization of non- current assets decreased from € 1.8 million in

2012 to € 1.6 million . The paid interest expenses amounted to € 0.9 million in 2013 and thus in line

with payments in 2012. Changes in working capital amounted to € -2.2 million in 2013 compared to €

0.8 million in 2012 due to increased invoicing in Oil & Gas industry per end of 2013, increased work

in process in 2013 and decreased trade and other payables in 2013 compared to 2012.

Total cash outflow from investing activities amounted to € 4.1 million in 2013 compared to € 3.9

million in 2012 mainly due to increased payment for research and development costs. The payments

for investments in property, plant and equipment decreased from € 1.1 million in 2012 to € 0.8

million in 2013.

Net cash used for financing activities amounted to € 1.7 million in 2013 which is at the same level as

the net cash used for financing activities of € 1.6 million in 2012. Net cash outflow of the Zenitel

Group amounted to €2.2 million in 2013, against €0.5 million in 2012. At the end of 2013, Zenitel’s

net cash and cash equivalents amounted to €0.6 million.

Analysis 2011-2012:

Net cash generated from operating activities amounted in 2012 to € 6.1 million compared to € 4.7

million in 2011. The expensed development costs increased in 2013 to € 2.0 million versus € 1.9

million in 2011. Depreciation and amortization of non- current assets in 2012 was € 1.8 million which

is in line with the depreciation and amortization costs of 2011. The paid interest expenses of € 1.0

million in 2011 decreased to € 0.9 million in 2012. Changes in working capital amounted to € 0.7

million in 2012 compared to € -0.1 million in 2011 due to improved collection in trade receivables in

2012 compared to 2011, decrease in work in process in 2012.

Total cash outflow from investing activities amounted to € 3.9 million in 2012 compared to € 3.0

million in 2011 mainly due to increased payment for research and development costs, increased

payments for property, plant, equipment and intangible assets.

Net cash used for financing activities amounted to € 1.6 million in 2012 compared to € 2.2 million in

2011.

The cash flow of the Zenitel Group amounted to €0.5 million in 2012, against the €0.6 million cash

outflow in 2011. At the end of 2012, Zenitel’s net cash position amounted to €2.9 million compared

to € 2.4 million per end of 2011.

10.5 Key developments since 31 December 2013

Zenitel is in a negotiation process to acquire some assets and employees from a supplier. The purpose

of the transaction is to reduce risk and secure future deliveries.

Zenitel does not expect a top line impact, as Zenitel already represents 80% of the suppliers’ turnover.

Therefore, Zenitel does not expect an impact on its share price.

128

10.6 Current trading and prospects

Zenitel reached €16.5 million in revenues for the first quarter of 2014 compared to €15.9 million last

year. This represents a growth of 4.3 percent.

The revenue growth is coming from the Secure Communication Systems (SCS), which is primarily

focusing on its worldwide recognized brands Stentofon and Vingtor. The Caribbean Network

businesses reported revenue in line with last year.

As the second quarter has started somewhat slower, Zenitel expects its Q2 revenues to be in line with

last year.

129

11. FINANCIAL INFORMATION

11.1 Historical financial information

131

11.2 Financial statements

134

The Group has some off-balance commitments regarding operating lease. The commitments were in

2013 € 9.7 million, in 2012 € 11.7 million and in 2011 € 10.0 million at year end. Lease payments

recognized in the income statement for 2013 amounted to € 2.7 million, in 2012 € 2.9 million and in

2011 € 2.8 million. Operating lease agreements relate to office premises, site rents, car lease and IT

equipment.

11.3 Auditing of historical annual financial information

Statutory auditor’s report to the general meeting of Zenitel for the year ended 31 December

2013

In accordance with the legal requirements, we report to you on the performance of the

engagement of statutory auditor, which has been entrusted to us. This report contains our

opinion on the consolidated statement of financial position as at 31 December 2013, the

consolidated statement of profit or loss for the year ended 31 December 2013 and the

explanatory notes, as well as the required additional information.

Report on the consolidated financial statements – unqualified opinion, with an emphasis of

matter paragraph

135

We have audited the consolidated financial statements of the company Zenitel NV for the year

ended 31 December 2013, prepared in accordance with International Financial Reporting

Standards as adopted by the European Union, which show total assets of 37.771 kEUR and a

consolidated profit for the year of 1.761 kEUR.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation of the consolidated financial statements that

give a true and fair view in accordance with International Financial Reporting Standards as

adopted by the European Union, and for such internal control as management determines is

necessary to enable the preparation of consolidated financial statements that are free from

material misstatements, whether due to fraud or error.

Auditor’s responsibility

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. Those standards require that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance about whether the consolidated financial

statements are free from material misstatements.

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

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 auditor considers internal control relevant to the entity’s preparation of the

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 estimates made by management, as well as evaluating the overall presentation of

the consolidated financial statements. We have obtained from management and the

company’s officials the explanations and information necessary for our audit.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for the audit opinion.

Unqualified opinion, with an emphasis of matter paragraph

In our opinion, the consolidated financial statements of the company Zenitel NV as of

31 December 2013 give a true and fair view of the net assets and financial position of the

group as at 31 December 2013, as well as its consolidated results and cash flows for the year

then ended, in accordance with International Financial Reporting Standards as adopted by

the European Union.

136

In the past the company and its subsidiaries (jointly “the group”) has incurred significant

losses that fundamentally affected the financial position. Without modifying the above

conclusion, we would like to draw your attention to the going concern paragraph in the

(consolidated) annual report, in which the Board of Directors justifies the application of the

valuation rules under the going concern assumption. The assumption to continue as a going

concern is only valid in the case the group continues to have access to short and medium term

financing. No adaptations have been made to the consolidated financial information as to the

valuation or the classification of certain items in the statement of financial position which

would be necessary if the group is no longer able to continue its activities.

Report on other legal and regulatory requirements

Management is responsible for the preparation and the content of the consolidated Directors’

report.

As part of our engagement and in accordance with the additional Belgian standard on

auditing added to the International Standards on Auditing, it is our responsibility, for all

significant aspects, to ascertain the compliance of certain legal and regulatory requirements.

Based on that requirement we report the following additional statements, which do not modify

our audit opinion on the consolidated financial statements:

• The consolidated Directors’ report includes the information required by law, is

consistent, in all material aspects, with the consolidated financial statements and does not

include any obvious inconsistencies with the information that we became aware of during the

performance of our engagement.

• Furthermore we draw your attention to the annexes 27 and 29 to the financial

statements in which pending important litigations are described. Provisions have been

recorded based on the current situation of the files in order to cover the liabilities to certain

cases.

Merelbeke, 18 March 2014

BDO Réviseurs d’Entreprises Soc. Civ. SCRL

Statutory auditor

Represented by Veerle Catry

Statutory auditor’s report to the general meeting of the company Zenitel NV for the year

ended 31 December 2012



opinion on the consolidated balance sheet as at 31 December 2012, the consolidated profit

and loss statement for the year ended 31 December 2012 and the explanatory notes, as well

as the required additional information.

137

Report on the consolidated financial statements – unqualified opinion, with an emphasis of

matter paragraph

We have audited the consolidated financial statements of the company Zenitel NV for the year

ended 31 December 2012, prepared in accordance with International Financial Reporting

Standards as adopted by the European Union, which show a balance sheet total of

41.030 kEUR and a consolidated profit for the year of 883 kEUR.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation of the consolidated financial statements that

give a true and fair view in accordance with International Financial Reporting Standards as

adopted by the European Union, and for such internal control as management determines is

necessary to enable the preparation of consolidated financial statements that are free from

material misstatements, whether due to fraud or error.



on our audit. We conducted our audit in accordance with International Standards on

Auditing. Those standards require that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance about whether the consolidated financial

statements are free from material misstatements.


disclosures in the consolidated financial statements. The procedures selected depend on the

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 auditor considers internal control relevant to the entity’s preparation of the

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 estimates made by management, as well as evaluating the overall presentation of

the consolidated financial statements. We have obtained from management and the

company’s officials the explanations and information necessary for our audit.




In our opinion, the consolidated financial statements of the company Zenitel NV as of

31 December 2012 give a true and fair view of the net assets and financial position of the

group, as well as its consolidated results and cash flows for the year then ended, in

accordance with International Financial Reporting Standards as adopted by the European

Union.

138








valuation or the classification of certain balance sheet items which would be necessary if the

group is no longer able to continue its activities.


Management is responsible for the preparation and the content of the consolidated Directors’

report.

As part of our engagement, it is our responsibility, for all significant aspects, to ascertain the

compliance of certain legal and regulatory requirements. Based on that requirement we

report the following additional statements, which do not modify our audit opinion on the

consolidated financial statements:

• The consolidated Directors’ report includes the information required by law, is consistent,

in all material aspects, with the consolidated financial statements and does not include any

obvious inconsistencies with the information that we became aware of during the


Furthermore we draw your attention to the annexes 27 and 29 to the financial statements in

which pending important litigations are described. Provisions have been recorded based on

the current situation of the files in order to cover the liabilities to certain cases.



Statutory auditor


Statutory auditor’s report to the general meeting of shareholders of Zenitel NV on the

consolidated financial statements for the year ended 31 December 2011



opinion on the true and fair view of the consolidated financial statements as well as the

required additional statements and information.

139

Unqualified audit opinion on the consolidated financial statements with an emphasis of matter

paragraph

We have audited the consolidated financial statements of Zenitel NV for the year ended

31 December 2011, prepared in accordance in accordance with International Financial

Reporting Standards as adopted by the European Union, which show a balance sheet total of

41.221 kEUR and a consolidated profit of 549 kEUR.

Management is responsible for the preparation and the fair presentation of these

consolidated financial statements. This responsibility includes: designing, implementing and

maintaining internal control relevant to the preparation of consolidated financial statements

that are free from material misstatement, whether due to fraud or error; selecting and

applying appropriate accounting principles and making accounting estimates that are

reasonable in the circumstances.


on our audit. We conducted our audit in accordance with the legal requirements and the

Auditing Standards applicable in Belgium, as issued by the Institut des Réviseurs

d’Entreprises / Instituut van de Bedrijfsrevisoren. Those standards require that we plan and

perform the audit to obtain reasonable assurance whether the consolidated financial

statements are free from material misstatement, whether due to fraud or error.

In accordance with the above-mentioned auditing standards, we have carried out procedures

to obtain audit evidence about the amounts and disclosures in the consolidated financial

statements. The selection of these procedures is a matter for our judgment, as is the

assessment of the risk that the consolidated financial statements contain material

misstatements, whether due to fraud or error. In making those risk assessments, we have

considered the company’s internal control relating to the preparation and fair presentation of

the consolidated financial statements, in order to design audit procedures that were

appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the company’s internal control. We have also assessed the appropriateness of

the accounting principles and consolidation principles, the reasonableness of accounting

estimates made by management, as well as the overall presentation of the consolidated

financial statements. Finally, we have obtained from management and the company’s officials

the explanations and information necessary for our audit. We believe that the audit evidence

we have obtained provides a reasonable basis for our opinion.

In our opinion the consolidated financial statements for the year ended 31 December 2011

give a true and fair view of the group’s assets and liabilities, its financial position, the results

of its operations and cashflow in accordance with International Financial Reporting

Standards as adopted by the European Union.

140








valuation or the classification of certain balance sheet items which would be necessary if the

group is no longer able to continue its activities.

Additional statements and information

The preparation of the consolidated Directors’ report and its content are the responsibility of

management.

Our responsibility is to supplement our report with the following additional statements and

information, which do not modify our audit opinion on the consolidated financial statements:

The consolidated Directors’ report includes the information required by law and is consistent

with the consolidated financial statements. We are, however, unable to comment on the

description of the principal risks and uncertainties which the consolidated group is facing,

and of its financial situation, its foreseeable evolution or the significant influence of certain

facts on its future development. We can nevertheless confirm that the matters disclosed do not

present any obvious inconsistencies with the information that we became aware of during the


• Furthermore we draw your attention to the annexes 27 and 29 to the financial statements

in which pending important litigations are described. Provisions have been recorded based

on the current situation of the files in order to cover the liabilities to certain cases.



Statutory auditor


Statutory auditor’s report to the general meeting of the company Zenitel NV for the year ended

31 December 2013

In accordance with the legal and statutory requirements, we report to you on the performance

of the engagement of statutory auditor, which has been entrusted to us. This report contains

our opinion on the balance sheet as at 31 December 2013, the profit and loss statement for

the year ended 31 December 2013 and the explanatory notes, as well as the required

additional information.

141

Report on the financial statements – unqualified opinion, with an emphasis of matter

paragraph

We have audited the financial statements of the company Zenitel NV for the year ended

31 December 2013, prepared in accordance with the financial reporting framework

applicable in Belgium, which show a balance sheet total of 44.508.777,77 EUR and a profit

for the year of 3.414.532,83 EUR.

Management’s responsibility for the financial statements

Management is responsible for the preparation of the financial statements that give a true

and fair view in accordance with the financial reporting framework applicable in Belgium,

and for such internal control as management determines is necessary to enable the

preparation of financial statements that are free from material misstatements, whether due to

fraud or error.


Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing. Those

standards require that we comply with ethical requirements and plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free from material

misstatements.


disclosures in the financial statements. The procedures selected depend on the auditor’s

judgment, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity’s preparation of the 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 estimates made by management, as well

as evaluating the overall presentation of the financial statements. We have obtained from

management and the company’s officials the explanations and information necessary for our

audit.




In our opinion, the financial statements give a true and fair view of the assets and liabilities

and the financial position of the company Zenitel NV as at 31 December 2013, as well as its

results for the year then ended, in accordance with the financial reporting framework

applicable in Belgium.

142

Although the company has a long history of losses and pending litigations that might have an

adverse effect on the financial position and cash flows of the company, the financial

statements are prepared in going concern. This assumption is only justified to the extent that

the company can further rely on the financial support of the shareholders or other financial

sources. Without prejudice to the above unqualified opinion, we draw your attention to the

Directors’ report in which the Board of Directors, according to Belgian legal requirements,

justifies the application of the valuation rules in going concern. No adjustments were made

with respect to valuation or classification of balance sheet items that would be required in

case the company discontinues its activities.


Management is responsible for the preparation and the content of the Directors’ report, the

compliance of the accounting records with legal and regulatory requirements applicable in

Belgium, as well as the compliance with the Company Code and the bylaws of the company.

As part of our engagement and in accordance with the additional Belgian standard on

auditing added to the International Standards on Auditing, it is our responsibility, for all

significant aspects, to ascertain the compliance of certain legal and regulatory requirements.

Based on that requirement we report the following additional statements, which do not modify

our audit opinion on the financial statements:

• The Directors’ report includes the information required by law, is consistent, in all

material aspects, with the financial statements and does not include any obvious

inconsistencies with the information that we became aware of during the performance of

our engagement.

• Without prejudice to formal aspects of minor importance, the accounting records were

maintained in accordance with the legal and regulatory requirements applicable in

Belgium.

• The appropriation of results proposed to the general meeting complies with the legal and

statutory provisions.

• There are no transactions undertaken or decisions taken in violation of the company's

bylaws or the Company Code that we have to report to you.



Statutory auditor


Statutory auditor’s report to the general meeting of the company Zenitel NV for the year ended

31 December 2012



our opinion on the balance sheet as at 31 December 2012, the profit and loss statement for

the year ended 31 December 2012 and the explanatory notes, as well as the required

additional information.

143

Report on the financial statements – unqualified opinion, with an emphasis of matter

paragraph

We have audited the financial statements of the company Zenitel NV for the year ended

31 December 2012, prepared in accordance with the financial reporting framework

applicable in Belgium, which show a balance sheet total of 45.516.426,53 EUR and a loss for

the year of 3.150,70 EUR.

Management’s responsibility for the financial statements

Management is responsible for the preparation of the financial statements that give a true and

fair view in accordance with the financial reporting framework applicable in Belgium, and

for such internal control as management determines is necessary to enable the preparation of

financial statements that are free from material misstatements, whether due to fraud or error.



We conducted our audit in accordance with International Standards on Auditing. Those

standards require that we comply with ethical requirements and plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free from material

misstatements.


disclosures in the financial statements. The procedures selected depend on the auditor’s

judgment, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity’s preparation of the 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 estimates made by management, as well

as evaluating the overall presentation of the financial statements. We have obtained from

management and the company’s officials the explanations and information necessary for our

audit.




In our opinion, the financial statements give a true and fair view of the assets and liabilities

and the financial position of the company Zenitel NV as at 31 December 2012, as well as its

results for the year then ended, in accordance with the financial reporting framework

applicable in Belgium.

144

Although the company has incurred considerable losses which affect the financial position of

the company, the financial statements are prepared in going concern. This assumption is only

justified to the extent that the company further can rely on the financial support of the

shareholders or other financial sources. Without prejudice to the above unqualified opinion,

we draw your attention to the Directors’ report in which the Board of Directors, according to

Belgian legal requirements, justifies the application of the valuation rules in going concern.

No adjustments were made with respect to valuation or classification of balance sheet items

that would be required in case the company discontinues its activities.


Management is responsible for the preparation and the content of the Directors’ report, the

compliance of the accounting records with legal and regulatory requirements applicable in

Belgium, as well as the compliance with the Company Code and the bylaws of the company.

As part of our engagement it is our responsibility, for all significant aspects, to ascertain the

compliance of certain legal and regulatory requirements. Based on that requirement we

report the following additional statements, which do not modify our audit opinion on the

financial statements:

o The Directors’ report includes the information required by law and is

consistent with the financial statements. We are, however, unable to comment

on the description of the principal risks and uncertainties which the company

is facing, and on its financial situation, its foreseeable evolution or the

significant influence of certain facts on its future development. We can

nevertheless confirm that the matters disclosed do not present any obvious

inconsistencies with the information that we became aware of during the


o Without prejudice to formal aspects of minor importance, the accounting

records were maintained in accordance with the legal and regulatory

requirements applicable in Belgium.

o The appropriation of results proposed to the general meeting complies with

the legal and statutory provisions.

o There are no transactions undertaken or decisions taken in violation of the

company's bylaws or the Company Code that we have to report to you.



Statutory auditor


Statutory auditor’s report to the general meeting of shareholders of Zenitel NV on the financial

statements for the year ended 31 December 2011



our opinion on the true and fair view of the financial statements as well as the required

additional statements and information.

145

Unqualified audit opinion on the financial statements, with an emphasis of matter

paragraph

We have audited the financial statements of Zenitel NV for the year ended 31 December 2011,

prepared in accordance with the financial reporting framework applicable in Belgium, which

show a balance sheet total of 46.321.724 EUR and a loss for the year of 4.478.639 EUR.

Management is responsible for the preparation and the fair presentation of these financial

statements. This responsibility includes: designing, implementing and maintaining internal

control relevant to the preparation and fair presentation of financial statements that are free

from material misstatement, whether due to fraud or error; selecting and applying

appropriate accounting policies; and making accounting estimates that are reasonable in the

circumstances.


We conducted our audit in accordance with the legal requirements and the Auditing

Standards applicable in Belgium, as issued by the Institute of Registered Auditors (Institut des

Réviseurs d’Entreprises / Instituut van de Bedrijfsrevisoren). Those standards require that we

plan and perform the audit to obtain reasonable assurance whether the financial statements

are free from material misstatement, whether due to fraud or error.

In accordance with the above-mentioned auditing standards, we have carried out procedures

to obtain audit evidence about the amounts and disclosures in the financial statements. The

selection of these procedures is a matter for our judgment, as is the assessment of the risk that

the financial statements contain material misstatements, whether due to fraud or error. In

making those risk assessments, we have considered the company’s internal control relating to

the preparation and fair presentation of the financial statements, in order to design audit

procedures that were appropriate in the circumstances, but not for the purpose of expressing

an opinion on the effectiveness of the company’s internal control. We have also assessed the

appropriateness of the accounting policies used and the reasonableness of accounting

estimates made by management, as well as the overall financial statement presentation.

Finally, we have obtained from management and the company’s officials the explanations and

information necessary for our audit. We believe that the audit evidence we have obtained

provides a reasonable basis for our opinion.

In our opinion, the financial statements for the year ended 31 December 2011 give a true and

fair view of the company’s assets and liabilities, its financial position and the results of its

operations in accordance with the financial reporting framework applicable in Belgium.

Although the company has incurred considerable losses which affect the financial position of

the company, the financial statements are prepared in going concern. This assumption is only

justified to the extent that the company further can rely on the financial support of the

shareholders or other financial sources. Without prejudice to the above unqualified opinion,

we draw your attention to the Directors’ report in which the Board of Directors, according to

Belgian legal requirements, justifies the application of the valuation rules in going concern.

146

No adjustments were made with respect to valuation or classification of balance sheet items

that would be required in case the company discontinues its activities.

Additional statements and information

The preparation of the Directors’ report and its content, as well as the company's compliance

with the Company Code and its bylaws are the responsibility of management.

Our responsibility is to supplement our report with the following additional statements and

information, which do not modify our audit opinion on the financial statements:

The Directors’ report includes the information required by law and is consistent with the

financial statements. We are, however, unable to comment on the description of the principal

risks and uncertainties which the company is facing, and on its financial situation, its

foreseeable evolution or the significant influence of certain facts on its future development.

We can nevertheless confirm that the matters disclosed do not present any obvious

inconsistencies with the information that we became aware of during the performance of our

engagement.

Without prejudice to formal aspects of minor importance, the accounting records were

maintained in accordance with the legal and regulatory requirements applicable in Belgium.

There are no transactions undertaken or decisions taken in violation of the company's bylaws

or the Company Code that we have to report to you. The appropriation of results proposed to

the general meeting complies with the legal and statutory provisions.

In accordance with article 523 of the Company Code, we are also required to report to you

on the following transactions which have taken place since the last annual general meeting:

The board of directors ratified during its board of directors meeting dd. 5 May 2011 the

agreement between the entities of the Zenitel Group and the entities of Crescent Group dated

27 April 2011. This agreement contained the sale of the minority stakes of Zenitel NV and

Zenitel Finance Netherlands BV in respectively SAIT Zenitel NV and SAIT Zenitel

Netherlands BV, as well as the buy off of restructuring obligations by Zenitel NV from SAIT

Zenitel NV together with the netting of debt and liability positions between the signing parties.

In its annual report, the board of directors has, in accordance with article 523 of the

Company Code, mentioned this transaction in which Mr. Eric Van Zele, VZH NV, had a

conflict of interest.

We refer to the annual report for the related paragraphs from the minutes of the board of

directors.

The financial judicial implications for Zenitel NV relate to the fact that VZH NV, represented

by Mr. Eric Van Zele, is shareholder and director of Crescent NV, who has a majority share

in SAIT Zenitel NV and SAIT Zenitel Netherlands BV.

147



Statutory auditor


11.4 Interim and other financial information

The Issuer refers to the Press Release Trading Update Q1 2014 as published on the Issuer's website

(see also section 10.6 "Current trading and prospects").

148

12. GLOSSARY

Act of 2 August 2002 The Belgian Act of 2 August 2002 on the supervision of the financial sector

(Loi relative à la surveillance du secteur financier et aux services financiers

/ Wet betreffende het toezicht op de financiële sector en de financiële

diensten).

Act of 16 June 2006 The Belgian Act of 16 June 2006 concerning the public offerings of

securities and the admission of securities to trading on a regulated market

(Loi relative aux offres publiques d’instruments de placement et aux

admissions d’instruments de placement à la négociation sur des marchés

réglementés / Wet op de openbare aanbieding van beleggingsinstrumenten

en de toelating van beleggingsinstrumenten tot de verhandeling op een

gereglementeerde markt).

Auditor BDO Bedrijfsrevisoren - BDO Réviseurs d'Entrepises Soc. Civ. SCRL, Da

VIncilaan 9, Box E 6, Elsinore Building - Corporate Villa, 1935 Zaventem,

BE 0431.088.289 RLE Brussels, represented by Veerle Catry, réviseur

d'entreprise.

Backstop

Commitment

The unconditional commitment by 3D NV to subscribe all New Shares not

subscribed by Existing Shareholders through their Non-Statutory

Preferential Subscription Rights at the Issue Price (the "Backstop

Commitment").

BCC Belgian companies code.

Closing Date The date on which the New Shares are issued, which is expected to be on or

about 24 June 2014.

Euronext Brussels NYSE Euronext Brussels.

EU Savings Directive The EC Council Directive 2003/48/EC on the taxation of savings income.

Existing Shareholders The shareholders of the Issuer who hold shares of the Issuer on 10 June

2014, after closing of markets on Euronext Brussels.

FSMA The Belgian Financial Services and Market Authority (Autorité des services

et des marchés financiers / Autoriteit financiële diensten en markten).

Group The Issuer and its subsidiaries.

IFRS International Financing Reporting Standards as adopted in the European

Union.

Issue Price The Issue Price is fixed at €0.80 per New Share of which €0.6040682 shall

represent capital and the remainder shall be issue premium.

149

Issuer or Zenitel Zenitel NV, Z.I. Research Park 110, 1731 Zellik, BE 0423.150.608 RLE

Brussels.

Lead Manager Bank Degroof, rue Guimard 18, 1040 Brussels.

Listing Date 24 June 2014.

Member State A member state of the European Economic Area (or a member state of the

European Union as regards the EU Savings Directive).

New Shares The shares of the Issuer that will be offered in the Offering.

Non-Statutory

Preferential

Subscription Right(s)

Each Existing Shareholder shall be granted one non-statutory preferential

subscription right per share held in the Issuer represented by coupon No. 3

attached to the existing shares of the Issuer, such non-statutory preferential

subscription right will neither be listed on any stock exchange or otherwise

tradable or transferrable nor will they be the subject of an offer or private

placement and each non-statutory preferential subscription right will give an

Existing Shareholder the right to 1 New Share in the Offering.

Offering The public offering of the New Shares.

Prospectus This prospectus dated 10 June 2014.

Prospectus Directive The Directive 2003/71/EC of the European Parliament and of the Council of

4 November 2003 on the prospectus to be published when securities are

offered to the public or admitted to trading and amending Directive

2001/34/EC (and amendments thereto, including the 2010 PD Amending

Directive, to the extent implemented or having direct effect in the Relevant

Member State).

Prospectus Regulation Commission Regulation (EC) No 809/2004 of 29 April 2004 implementing

the Prospectus Directive, as amended by the Commission regulations (EC)

No 211/2007 and No 1289/2008 as well as the Commission delegated

regulations (EU) No 311/2012, No 486/2012 and No 862/2012.

Regulation S Regulation S under the Securities Act.

Relevant Member

State

Each Member State that has implemented the Prospectus Directive.

Royal Decree of 14

November 2007

The Belgian Royal Decree of 14 November 2007 relating to the obligations

of issuers of financial instruments admitted to trading on a regulated market

(Arrêté royal relatif aux obligations des émetteurs d’instruments financiers

admis à la négociation sur un marché réglementé / Koninklijk besluit

betreffende de verplichtingen van emittenten van financiële instrumenten die

zijn toegelaten tot de verhandeling op een gereglementeerde markt).

150

SCS Secure Communication Systems.

Securities Act The U.S. Securities Act of 1933, as amended.

Selling Agent Bank Degroof.

Subscription Period 13 June 2014 (08:00 CET) up to including 19 June (16:00 CET)

Subscription ratio 1 New Share for 1 existing share of the Issuer.

Underwriting

Agreement

The underwriting agreement which is expected to be entered into on or

about 10 June 2014 by the Lead Manager and the Issuer.

3D NV 3D NV, Rijvisschestraat 118, 9052 Zwijnaarde, BE 0448.341.027, RLE

Ghent.

152

COMPANY

Zenitel SA/NV

Z1 Research Park 110

1731 Zellik

Belgium

LEAD MANAGER AND SELLING AGENT

Bank Degroof SA/NV

Rue Guimard 18

1040 Brussels

Belgium

LEGAL ADVISOR TO THE COMPANY

NautaDutilh BVBA/SPRL

Chaussée de La Hulpe 120

1000 Brussels

Belgium

INDEPENDENT AUDITOR

BDO Bedrijfsrevisoren Burg. Ven. CVBA

Da Vincilaan 9 – Box E.6

1935 Zaventem

Belgium

prospectus of the public offering to subscribe to

Documents