Paragon ID : First-half results for the six months ended 31st December 2021 - Confirmation of strong double-digit growth for the full year
Paragon ID (Euronext Paris - FR0013318813 - PID), the European leader in RFID solutions, publishes its consolidated results for the 1st half of the 2021/22 financial year, which will close on 30th June 2022. These consolidated results have been the subject of a limited review by the company's auditors and were approved by the board of directors of Paragon ID SA on 24th March 2022.
| Turnover | 40.7 | 43.2 | 56.6 | 83.9 | |
| EBITDA1 | 3.5 | 2.3 | 3.9 | 5.8 | |
| EBITDA margin1 | 8.6% | 5.3% | 6.9% | 6.9% | |
| Expenses related to share-based payments | -0.2 | -0.1 | -0.0 | -0.3 | |
| Amortization and depreciation charges | -4.1 | -3.5 | -4.7 | -8.6 | |
| Current operating loss | -0.7 | -2.3 | -0.8 | -3.0 | |
| Non-recurring expenses | -1.7 | -0.4 | -0.7 | -2.1 | |
| Operating loss | -2.5 | -2.6 | -1.5 | -5.1 | |
| Financial result | -0.6 | -0.6 | -1.0 | -1.2 | |
| Other and taxes | 0.4 | 0.3 | 0.0 | 0.7 | |
| Net loss | -2.7 | -3.0 | -2.5 | -5.7 |
1 Current operating income before (i) depreciation and amortization, and (ii) calculated charges related to share-based payments.
airweb is consolidated within Paragon ID since 1st November 2020. Apitrak is consolidated since 1st June 2021 and Security Label Gmbh is consolidated since 1st July 2021. The new subsidiaries created to host the purchase of the assets of EDM are consolidated since 1st October 2021.
Strong growth from the combination of the post-Covid recovery in traditional activities and advances in the company's transformative strategic initiatives
In the traditional activities,
- Transport & Smart Cities posted growth of 47%, compared to the corresponding prior year six months, as clients replenished stocks of tickets and cards, responding to the progressive return of commuters and tourists to urban transport networks.
- In e-ID, the reopening of borders and the progressive relaxing of travel restrictions drove demand for passports and other forms of electronically secured identification, resulting in growth of 33% in H1 compared to the corresponding prior year six months.
In the transformative strategic initiatives,
- The continued success of the company's platforms for Real-Time-Locating-Systems (RTLS) and the integration of new subsidiary Security Label Gmbh underpinned growth in Track & Trace which increased 57% compared to the corresponding prior year six months.
- In Digital Ticketing, the consolidation of airweb since November 2020 and the first deployments of Account-Based-Ticketing solutions in France marked the beginning of the pivot from sales of commoditised ticketing media towards Platform as a Service (PaaS) solutions.
- While the company has since received its first significant orders for large volumes of RFID Tags destined for the Retail Internet of Things (IoT) market, there was little revenue recorded in this activity in H1.
- In Payment, growth in H1 was limited to 10% due to a difference in timing of delivery of significant orders for specialty inlays on the Amatech subsidiary.
Further information on sales appears in the H1 revenue press release of 31st January 2022 (click here).
EBITDA1 up 12%, EBITDA margin of 6.9%
EBITDA in H1 2021/22 was €3.9m, increasing by 12% over the same period last year. The percentage EBITDA margin declined from the prior year's 8.6% to 6.9% due to the following:
- In H1 2020/21, the company benefited from governmental measures supporting companies during the Covid-19 pandemic. The company also benefited from indemnities received from some clients who did not fulfil minimum contracted volumes. These elements account for most of the EBITDA margin variation.
- Supply chain disruptions caused significant increases in Paragon ID's costs of raw materials in H1 2021/22. The inevitable time-lag in passing these increases on to customers resulted in depressed gross margins in the period.
- The consolidations of the company's tech start-ups (Apitrak and airweb) and the integration of recently acquired entities, which had been weakened by the pandemic (Security Label and EDM), had an initial dilutive effect on the company's overall EBITDA percentage margin.
- Finally, with the ongoing support of Paragon ID's controlling shareholder, Paragon Group, the company was able to pursue its strategic objectives throughout the period, with increased investment in payroll and operating expenses (reducing EBITDA), as well as additional capital expenditure.
Amortization and depreciation increased from €4.1m to €4.7m due to the increased investment in capital expenditure and due to the impact of the acquisitions made over the last 18 months.
Exceptional, one-off costs in the period declined from €1.7m to €700k. The H1 charge of €700k arises from a technical interpretation of certain clauses attaching to a recent acquisition. Financial charges, comprising interest on borrowings and costs of factoring were €1m in the 1st half.
The company's net result for H1 2021/22 was a loss of €2.5m compared to a loss of €2.7m for H1 2020/21.
Balance Sheet as at 31st December 2021
| Non-current assets | 103.1 | 96.1 | Equity | 23.3 | 27.8 | |
| Incl. goodwill | 62.1 | 59.8 | Financial debts | 35.1 | 32.6 | |
| Current assets | 36.4 | 28.2 | Bank loans | 30.4 | 27.8 | |
| Trade & other receivables | 9.6 | 8.6 | Bank overdrafts | 4.7 | 4.7 | |
| Inventories | 19.9 | 13.3 | ||||
| Cash | 9.2 | 13.7 | Parent company loans | 25.3 | 22.6 | |
| Leasing debts | 6.5 | 6.4 | ||||
| Trade & other payables | 30.1 | 23.8 | ||||
| Other liabilities | 28.4 | 24.7 | ||||
| TOTAL | 148.7 | 137.9 | TOTAL | 148.7 | 137.9 |
1 Financial statements as at 30 June 2021 have been restated for the effects of the completion of the purchase price allocation (PPA) exercise related to the acquisition of Apitrak.
Increase in total assets
Acquisitions and capital expenditure in the six months ended 30th June 2021 caused non-current assets to increase by €7.0m.
The recovery in the company's activities and the consolidation of three new subsidiaries since H1 2020/21, alongside supply chain disruptions caused working capital to increase. Supply disruptions and cost increases in key material components, including chips for RFID inlays, papers and adhesives prompted higher inventory holdings to service customers' requirements.
Increase in debt to finance growth and acquisitions
Operating cash inflow in the six months ended 31st December 2021 was €1.2m, despite an increase of €2.1m in working capital in the period. Capital expenditures of €5.4m resulted in net cash outflows of €4.1m.
Completion payments related to the acquisitions of Security Label Gmbh and the assets of EDM totalled €3.9m.
The increase in net debt was financed by additional intercompany loans from the Paragon Group, a state-guaranteed loan (“Pret Participatif de Relance”) for €3.7m and from cash.
In January 2022, Paragon ID obtained an additional €5.0m in financing in the form of a “Green Loan” from the French Bank for Investment (BPI), to finance the company's pivot towards greener and more sustainable products and services.
Annual 2021/22 double digit revenue growth expected
As previously signalled, Paragon-ID expects to complete the FY 2021/22 in high double-digit growth compared to the prior year. Visibility of orders, stocks and deliveries permits the company to maintain this expectation, provided continuing supply chain disruptions do not deteriorate further.
Supply chain disruptions and material cost increases continue to be a source of risk for the company in the near-term and the medium-term. In addition to shortages of chips and other electronic components, supplies of paper, adhesives and other materials have been disrupted. Cost inflation in all material components is an ongoing challenge.
At this time, it is too early to assess the potential disruption and cost impacts pursuant to Russia's actions in Ukraine. No impact is recorded in the financial reporting as at 31st December 2021.
2022 financial calendar
| 2022/22 Q3 turnover | 27 April 2022 |
| 2022/22 Q4 turnover | 26 July 2022 |
| 2021/22 Yearly results | 25 October 2022 |
These dates are given for information only and may be changed if necessary. Publications will take place before the opening of the Euronext markets.
About Paragon ID
About Paragon ID Paragon ID is a leader in identification solutions, in particular in the e-ID, Transport & Smart Cities, Traceability & Brand Protection and Payment sectors.
Paragon ID employs more than 500 staff, with manufacturing sites in US and Europe, close to its customers.
Paragon ID is listed on Euronext Paris with a majority of its shares being held by Paragon Group, a leading provider of Customer Communications. Identification solutions and Graphic services. Paragon Group is present in more than 20 countries with more than 9,000 employees around the world and achieved consolidated sales of € 1.214 Bn at the end of the 2020/21 financial year (closed June 30, 2021), recording a growth of 12%.
For further information about Paragon Group, visit Paragon-Europe.com.
Euronext Paris - Share identification: Paragon ID - ISIN Code: FR0013318813 - Mnemonic code: PID.
For further information about Paragon ID, visit Paragon-id.com.
Contacts
|
Paragon ID Clem Garvey CEO Tel: +33 (0)2 48 81 61 00 [email protected] |
ACTUS finance & communication Investor Relations Mathieu Omnes Tel: +33 (0)1 53 67 36 92 [email protected] |
ACTUS finance & communication Press relations Fatou-Kiné N'Diaye Tel: +33 (0)1 53 67 36 34 [email protected] |
1 Current operating income before (i) depreciation and amortization, and (ii) calculated charges related to share-based payments.
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Full and original press release in PDF: https://www.actusnews.com/news/73705-paragon-id_pr_h1-202122_28032022_en.pdf
Source Actusnews
