Paragon ID Showing Resilience In H1 2020/21

Paragon ID spent €4.1 million in capital expenditure, including €1.1 million of industrial investments at Thames Technology to support the development of the Payment business.

The funding streams amounted to €3.5 million, mainly for the repayment of financial loans (€2.3 million) and rental debts (€0.9 million).

In the end, cash consumption was limited to €2.7 million in the 1st half of 2020/21.

On the asset side of balance sheet, goodwill was increased to €55.9 million as a result of the acquisition of an additional 30% of airweb's capital in November 2020.

The evolution of receivables and inventories compared to the end of June reflects the decline in activity during the last six months.

Cash available was €12.6 million as of December 31, 2020.

On the liabilities side of the balance sheet, financial debts were reduced to €26.1 million as of December 31st, 2020, of which €15 million issued from the EMP (State Guaranteed Loan) underwritten in May 2020. Borrowings from Paragon Group amounted to €24.9 million, comprising of a single bond debt of €10 million, due September 2024, and €14.9 million of cash advances from the reference shareholder to support the development of Paragon ID, including €10.3 million euros of repayable loans at maturity in June 2026.

As of December 31, 2020, Paragon ID's net financial debt stood at €13.5 million (excluding related party loans and rental debts), representing 47% of equity.

 

Outlook – activity update

Efforts to cut costs and to adapt the Company's industrial footprint have enabled Paragon ID to reduce the impact of the health crisis on its business and to show resilience in the 1st half of 2020/21.

The company has been able to maintain a solid level of operating profitability (EBITDA), but also to optimize its cashflow generation and thus maintain a healthy financial position.

In parallel with these efforts to adapt, Paragon ID continued to pursue its strategic goals during the 1st half of the financial year. The pertinence of the acquisitions done over the past two years has been demonstrated by:

  • the strong growth in the Payment business from AmaTech and Thames Technology,
  • the growing deployment of RFID Discovery technologies for the tracking of medical and industrial equipment,
  • the digitization of transport tickets which has accelerated during the health crisis.

In the short term, Paragon ID does not yet see tangible signals of recovery for its historical activities (e-ID and Transport - Smart Cities) and, given the level of ticket and card stocks among its customers, still anticipates a diminished activity in the 2nd half of 2020/21 for these divisions.

In terms of traceability, the dynamics remain well oriented but without returning to the pre-crisis level of activity. Paragon ID has just been selected for RFID tracking of clothing and protective equipment for health workers in the principal health service of one of its key geographic markets

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