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  Paragon ID company press release from 26/10/2018

  26/10/2018 - 07:00

Annual results 2017/18: a robust performance in a year of reorganization and transition - Establishment of a solid base and new governance for profitable growth in 2018/19


Paragon ID (Euronext Paris - FR0011980077 - PID), the leading provider of identification solutions for Transport, e-ID, Traceability and Brand Protection and Payment, has published its yearly consolidated results for the financial year 2017/18 ending June 30, 2018. These consolidated financial accounts have been prepared according to IFRS norms based on a 12-month period ended June 30, 2018 compared to an 18-month financial year ending on June 30, 2017. These annual financial accounts have been approved by the Board of Directors on 25 October 2018. The procedures for auditing the accounts have been carried out and the audit report relating to their certification is being finalized by the statutory auditors.

Consolidated annual results (€ M) – IFRS standards 2017/18
(12 months)
2016/17
(restated 12 months)
2016/17
(18 months)
Turnover 100.9 63.1 89.4
Restated EBITDA1 7.3 6.3 9.9
Restated EBITDA margin1 7.2% 9.9% 11.1%
Depreciation and amortization (6.0) (1.8) (2.7)
Underlying operating result 1.3 4.5 7.2
Underlying operating margin 1.3% 7.0% 8.0%
Non- recurring income and expenses (3.4) (5.4) (7.0)
Operating result (2.1) (1.0) 0.1
Financial income / (expenses) (1.8) (0.5) (0.7)
Net result from continuing activities (2.9) (2.0) (1.5)
Net result from discontinued activities (2.1) (0.1) (0,1)
Net result (5.1) (2.1) (1.6)

1 Operating income before depreciation, amortization and non-recurring items

Note: The 2016/17 turnover represents the consolidated financial data of the Paragon Group's Identification Division. Prior to the completion of the merger, Paragon Group reorganized its division by aggregating all of its "Identification" subsidiaries (five in total) under a lead holding company, Paragon France SAS. The reorganisation of the Paragon Group's Identification Division resulted in the new subsidiaries of Paragon France SAS being consolidated from March 1st, 2017. All of the subsidiaries, however, are included and contribute to the whole of the 2017/18 financial year, which therefore, constitutes a first full year of reference.

 

Consolidated turnover of €100.9 million, up 60%

At the end of its first year of business since the merger between ASK and Paragon Group's identification activities, Paragon ID reports a consolidated turnover of €100.9 million, up 60% comparing to the consolidated sales for the 2016/17 financial year (restated for 12 months).

The consolidated turnover for the 2016/17 fiscal year did not yet include all the subsidiaries of the Paragon Group Identification Division (consolidation effective since March 1st, 2017) nor ASK's contribution (consolidated from May 1st, 2017). In addition, the Group transferred a non-strategic activity to another entity of the Paragon Group prior to the Identification division's merger with ASK.

The industrial reorganization which took place during the financial year adversely affected the company's turnover. This reorganization is now complete, and the new organization is now fully operational, ready to take advantage of market growth and pursue its strategic objectives.

The People ID business line, which includes the e.ID, Transport & Smart Cities and gaming activities, totalled €69.5 million, in 2017/18. New contracts, signed at the end of the fiscal year, will have a positive impact in the 2nd part of the current financial year (2018/19).

The Product ID business, which combines the activities of Product Traceability & Brand Protection activities, totalled €31.4 million, in 2017/18. Significant commercial efforts to support our customers in their migrations towards new technologies are beginning to yield results without negatively impacting our traditional offerings.

 

Restated EBITDA amounted to €7.3 million, representing a restated EBITDA margin of 7.2%

Restated EBITDA for the 2017/18 fiscal year amounted to €7.3 million, representing a restated EBITDA margin of 7.2%, which only includes partially the full beneficial effects of the industrial reorganisation carried out following the merger.

The streamlining of the company's European industrial operations at the Argent-sur-Sauldre (France) and Bucharest (Romania) sites is now complete. The two units now benefit from the relocation to Europe of production previously performed in China, following the closure of the Chinese production unit. The company closed another plant in Boston (UK) during the year, with production transferred to Paragon ID's main plant in Hull (UK). These measures will lead to a reduction in the Group's industrial costs of €3 million in a full year, effective as of this (2018/19) financial year.

Net depreciation and amortization charges totalled €6.0 million in 2017/18 representing a significant increase due to amortization on intangible assets (patents, brands and customer relationship) linked to the merger. After taking these charges into account, recurring operating income amounted to €1.3 million in 2017/18.

Non-recurring expenses amounted to €3.4 million compared to €7.0 million in 2016/17. In 2017/18, these mainly comprise costs incurred in the context of industrial reorganisation (production transfers, closure costs of the Mouans-Sartoux, China, Boston (UK) plants).

Taking these non-recurring items into account, the operating loss amounted to €(2.1) million in the 2017/18 financial year.

The financial costs amount to €(1.8) million, compared to €(0.7) million in 2016/17. This increase is largely attributable to the interest on the bonds issued in accordance with the terms of the contribution defined during the merger with ASK.

Net income from continuing operations represents a loss of €(2.9) million, to which is added a € (2.1) million loss on the discontinued activity in China.

 

Balance sheet at December 31st, 2017

At June 30, 2018, the equity of Paragon ID amounted to €28.7 million.

Financial debts amounted to €15.4 million at the end of 2017, including €8.4 million in bank overdrafts and bank loans and factoring debts reduced to €4.5 million following the transfer of factoring to a non-recourse factoring contract.

Loans from related parties, amounting to €34.2 million, consist of the two bonds issued to the main shareholder to support the development of Paragon ID.

At June 30, 2018, Paragon ID maintained a sound financial structure with a slightly positive net cash position1 of €0.5 million.

Consolidated annual results (€ M)
IFRS
30/06
2017
30/06
2018
  Consolidated annual results (€ M)
IFRS
30/06
2017
30/06
2018
Non-current assets 75.9 74.1   Equity 33.4 28.7
Incl. Goodwill 50.3 49.9   Financial debts 23.4 15.4
Current assets 42.2 34.3   of which bank loans 4.2 5.7
of which trade and other receivables 23.7 16.6   of which bank overdrafts 4.1 2.7
of which Inventories 14.2 11.5   of which factoring debts 11.9 4.5
Cash & cash equivalents 6.9 11.4   Related-party loans 22.8 34.2
        Trade & other payables 24.1 25.5
        Other liabilities 21.3 15.9
TOTAL 125.0 119.7   TOTAL 125.0 119.7

 

Outlook

The 2017/18 financial year was characterised by the completion of the industrial reorganisation, the end of the disruptions linked to this type of change and the integration of the various teams and optimisation of commercial resources.

Paragon ID has entered the new financial year 2018/19 ready to deliver sustainable growth in its revenue and profitability. With this in mind, management is deploying new tools and new resources to improve profitability for each product line.

In terms of People ID, the stabilization of volumes for the US passport will be complemented by an increase in volumes for European and African passports and new projects that are currently under negotiation. In addition, the 2018/19 financial year should see a growth for new polycarbonate products. Paragon ID has also developed a new industrial process which be enable the company to improve the profitability of this product line. Transport activities are expected to grow, in particular due to the increase in volumes of new contracts (London, Washington, etc.). The positioning and know-how of the group in terms of mobile applications also bring future opportunities for growth with historical customers who have announced their desire to switch to mobile technologies. In a context of increased competition for traditional tickets, the group continues to focus on profitability and margin improvement for these products.

For the Product ID division, Paragon ID is pursuing the commercial development of new solution and service offerings for its customers, including the S-Printbox range, which facilitates the local issuance of RFID tags.

The new industrial configuration and the commercial investments made will enable the Group to continue to grow in the labels and tags activity. Furthermore, the group will benefit from the transition of its existing customers to RFID technologies as the market for RFID tags for product traceability is expected to grow strongly in the coming years.

At the operational level, the current financial year will be characterized by:

  • penetration of the payment market following the acquisition of AmaTech and its strategic advantage in the development of contactless metal payment cards;
  • working with our mass transit customers as they migrate towards new urban mobility technologies and the deployment of mobile apps;
  • the continual development of new industrial processes for passport and transport card products, relying on the group's R & D and industrial teams;
  • the development of new polycarbonate products and dynamic CVV.

John Rogers, Chairman and CEO, commented:

“ With the completion of the industrial reorganisation and the successful merger of the companies, Paragon ID is now 100% focused on the pursuit of profitable growth, both organic and external growth. “

 


About Paragon ID
Paragon ID is a leader in identification solutions, in particular in the e-ID, Transport & Smart Cities and Traceability & Brand Protection sectors.
Using the latest technologies such as RFID and NFC, Paragon ID provides smart cards, tickets, labels and tags to worldwide clients in diverse markets including public transport, manufacturing, logistics, gaming and retail.
Paragon ID employs more than 600 staff, with manufacturing sites in three continents (US, Europe and Asia), close to its customers.
Paragon ID is a part of Paragon Group, which is a leading provider of Identification and Customer Communications services, and has a total of more than €650 million turnover and close to 5,000 employees. Paragon Group combines generations of experience with the latest innovations in technology and smart data to enable responsive and meaningful interactions between organisations and their customers. For further information about Paragon Group, visit www.paragon-europe.com
Paragon ID is listed on Euronext Paris. Share identification: Paragon ID – ISIN Code: FR0011980077 – Mnemonic code: PID.
More information at Paragon-id.com

Contacts

Paragon ID
COO

John Rogers
Tél.: +33 (0)2 48 81 61 00
ACTUS finance & communication
Investor relations

Mathieu Omnes
Tél. : +33 (0)1 53 67 36 92
momnes@actus.fr
ACTUS finance & communication
Press relations

Jean-Michel Marmillon
Tél. : +33 (0)1 53 67 36 73
jmmarmillon@actus.fr

1 Financial debts (excluding factoring debts) – cash & cash equivalents