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9.2% restated EBITDA margin at constant exchange rates
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First beneficial effects of industrial reorganisation for 2nd half of 2017/18
Paragon ID (Euronext Paris - FR0011980077 - PID), the leading provider of identification solutions for Transport, e-ID, Traceability and Brand Protection, has published its half-year consolidated FINANCIAL statements for 2017/18 (period from 1 July to 31 December 2017). These results were approved by the Board of Directors on March 27, 2018 and have been subject to a limited review by the Statutory Auditors.
The company draws attention to the fact that the first half of 2016/17 presents the historical figures of the Identification Division of Paragon Group, and as such does not include the accounts of the subsidiary Bemrose Booth Paragon which joined the division on March 1st, 2017, nor the accounts of Paragon ID (formerly ASK) and its subsidiaries, which are included in the scope of consolidation as of May 1st, 2017. The 1st half of 2017/2018, on the other hand, is the 1st half-year where all the subsidiaries contribute to the results and, therefore, represents a first semester of reference.
| Consolidated results at 31/12 ( €M) Limited review |
1st half 2017/18 | 1st half 2016/17 |
| Turnover | 51.6 | 23.8 |
| Restated EBITDA1 at fixed exchange rate2 | 4.7 | 2.3 |
| Restated EBITDA margin at fixed exchange rate | 9.2% | 9.6% |
| Restated EBITDA1 | 4.3 | 2.3 |
| Restated EBITDA margin1 | 8.3% | 9.6% |
| Depreciation and amortization | (2.6) | (0.6) |
| Underlying operating result | 1.7 | 1.7 |
| Underlying operating margin | 3.3% | 7.2% |
| Non- recurring income and expenses | (1.7) | (0.5) |
| Operating result | 0.0 | 1.2 |
| Financial income / (expenses) | (1.0) | (0.1) |
| Net result from continuing activities | (1.1) | (0.9) |
| Net result from discontinued activities | (2.0) | - |
| Net result | (3.1) | 0.9 |
1 Operational results before depreciation, amortisation and non-recurring expenses
2 The restating of the foreign exchange is calculated using fixed exchange rates of 1.18 for the £ / € parity and 0.934 for the $ / € parity of the restated EBITDA for the current year.
Key figures for the first half of 2017/18
During the first half of the 2017/18 financial year, Paragon ID achieved consolidated sales of €51.6 million, compared with €23.8 million in the first half of 2016/17, which did not yet include contributions from all of the Group's subsidiaries.
The People ID activity (e.ID, Transport & Smart Cities and Gaming) achieved a half-year turnover of
€36.2 million. The e.ID activity experienced a cyclical and expected decline in deliveries of inlays for American passports, partially offset by the impetus of new countries in Europe and by strong development in driving licenses in the United States. In Transport & Smart Cities, the company secured new orders during the first half (London, Île-de-France region, Marseille, Turin) which will begin to generate revenues in the second half of this financial year.
The Product ID activity (Product Traceability & Brand Protection) generated sales of €15.4 million. The strong development of the RFID tags market (+12% average annual growth between 2017 and 2020 / Source: IDTechEx) is prompting the company to strengthen its commercial and marketing investments in this sector.
Restated EBITDA for the first half of 2017/18 amounted to €4.3 million, representing a restated EBITDA margin of 8.3%, which does not yet include the full beneficial effects of the industrial reorganisation carried out following the merger. In addition, the restated EBITDA includes an impact of the adverse changes in the £ / € and $ / € exchange rates of some €450 thousand over the period. At constant exchange rates, the restated EBITDA margin amounts to 9.2%.
The streamlining of the company's European industrial operations at the Argent-sur-Sauldre (France) and Bucharest (Romania) site is now complete. The two units will now also benefit from the relocation in Europe of production previously performed in China, following the closure of the Chinese production unit during this last half year.
As a reminder, the objective of the reorganisation is to improve the overall competitiveness of Paragon ID by achieving gains in margin and savings in fixed costs in the industrial base amounting to some €3 million for the full year. This reorganisation will be fully effective as of June 2018.
After taking into account depreciation and amortisation, the underlying operating result amounted to €1.7 million in the first half of 2017/18, representing an underlying operating margin of 3.3%.
Non recurring income and expenses amounted to €(1.7) million, mainly consisting of the costs to complete the industrial reorganisation.
The financial expenses amounted to €(1.0) million, mainly consisting of interest from bonds due to Grenadier Holdings.
Net result from continuing activities is a loss of €(1.1) million, while net result from discontinuing activities (ie. Closure of China) is a loss of €(2.0) million.
Balance sheet at December 31st, 2017
At December 31st, 2017, the equity of Paragon ID amounted to €30.9 million.
Financial debts amounted to €20.0 million at the end of 2017, including €9.8 million in bank overdrafts and bank loans and €8.6 million in factoring debts. The loans from related parties are the two bonds issued to Grenadier Holdings, as part of the acquisition agreement. (Main shareholder with 78.4% of the share capital of the company).
As of December 31st, 2017, Paragon ID's net debt amounted to €11.2 million, representing 36% of equity.
| Consolidated results at 31/12 M€ - limited review |
31/12 2017 |
Consolidated results at 31/12 M€ - limited review |
31/12 2017 |
|
| Non-current assets | 74.4 | Equity | 30.9 | |
| incl Goodwill | 49.9 | Financial debts | 20.0 | |
| Current assets | 37.4 | of which bank loans | 6.1 | |
| of which Trade and other receivables | 21.7 | of which bank overdrafts | 3.7 | |
| of which Inventories | 10.8 | of which factoring debts | 8.6 | |
| Cash and cash equivalents | 1.6 | Related-party loans | 24.8 | |
| Trade and other payables | 17.4 | |||
| Other liabilities | 20.4 | |||
| TOTAL ASSETS | 113.5 | TOTAL LIABITIES AND EQUITY | 113.5 |
Perspectives
The first half of the year saw the integration of the different teams and the optimisation of commercial resources.
In terms of results, the level of restated EBITDA at fixed exchange rates is in line with the company's objectives, despite the disruptions related to the industrial reorganization.
In parallel, the Company managed to decrease significantly the level of its Trade payables
Paragon ID is ready to take full advantage of the growth dynamic of its markets, and thus fully confirms the objectives of its business development plan: €250 million in sales and 10% EBITDA margin by 2021.
Reverse share split, 12th April 2018
On 12 March 2018, Paragon ID launched a reverse share split comprising the entire share capital of the company, resulting in the exchange of 1 new share for each 35 existing shares. The purpose of this plan is to allow the company to have its share listed at a price that is more in line with market standards and with investors' expectations. Additionally, it is hoped that this measure will reduce the volatility of the share price.
The reverse share split operation will end on April 12th, 2018, when the new Paragon ID shares will start trading. On this date, the new share capital will be MADE up of 1,665,337 shares and the new theoretical share price would then be €41.301. The isin code of the newly consolidated shares will be FR0013318813.
This transaction will have no impact on the value of the Paragon ID shares held by shareholders. In practice, each shareholder will automatically be allocated 1 new share for each bloc of 35 existing shares.
If shareholders have any question with regard to the procedure to follow, they have the opportunity to contact the company, directly, at the following email address: actionnaires@paragon-id.com.
Financial agenda for the 2017/2018 financial year
| Q3 turnover 2017/2018 | 24th April 2018 |
| Yearly turnover 2017/18 | 29th August 2018 |
| Annual results 2017/18 | 26th October 2018 |
These dates are given for information only, they are likely to be modified if necessary. All publications will take place before the opening of the Euronext markets.
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 name: Paragon ID - ISIN code: FR0011980077 - Mnemonic code: PID.
More information at Paragon-id.com
Contacts
| Paragon ID Managing Director Julien Zuccarelli Tél.: +33 (0)4 97 21 48 56 |
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 based on the closing price on Wednesday 28th March 2018 (€1.18)
