Growth And Performance

During the financial year ended 30 June 2019, Group sales reached €838 million, this is 25% ahead of June 2018.

Paragon Growth and Performance

During the financial year ended 30 June 2019, Group sales reached €838 million, this is 25% ahead of June 2018.

Thanks to recent acquisitions performed post year-end, the Group’s sales will now reach €1.2 billion, a 43% increase compared to June 2019.

Continuing our growth trajectory

Paragon Group continued to deliver on Group strategy by again achieving significant growth during the year. Sales have increased by €166 million, a 25% increase from 2018, resulting in consolidated sales of €838 million (2018: €673 million).
Our Underlying EBITDA² has reached €50 million, a 19% increase compared to the underlying EBITDA² reported in June 2018 (2018: €42 million). The underlying EBITDA² growth achieved in 2019 is €5 million above the Proforma EBITDA² reported in our 2018 financial statements (2018: €45 million).
The Group recorded a strong operating profit of €19 million (2018: €15 million). This was achieved despite a €7 million increase (+29%) in depreciation and amortisation charges. Depreciation and amortisation charges have increased to €31 million in 2019 (2018: €24 million), demonstrating the Group’s continuing strategy to invest in the best and newest technologies. Net Profit after tax for the year was €10 million (2018: €7 million).

Strong performance delivered through strict financial and operational discipline

We continue to manage the Group with robust operational and financial discipline and apply this approach as we acquire and integrate companies. We prepare and execute detailed post-acquisition plans to extract operational and procurement synergies identified during comprehensive due diligence processes. Continuous improvement programmes (CIPs) are operated across Paragon and are introduced in acquired companies to ensure that they adhere to the Group’s relentless push towards greater operating efficiency. All Group companies operate with the discipline of monthly management reporting and reviews to discuss performance and outlook, with specific focus on sales development and pipeline, cost control management, cash flow forecasting and working capital management. Our capital expenditure planning is based on strict ROI parameters.

Favourable debt and financing position

With €100 million of cash available (2018: €117 million), the Group’s prospects for acquisitions remain excellent, especially in light of an economic climate that is favourable to consolidation. The Group issued €141 million of Euro Private Placement Bonds on the Luxemburg MTF market between 2016 and 2018. These bonds, are repayable after 7 years’ (€52 million in December 2023 and €89 million in April 2025) and currently carry a 4% interest rate. Bond raising was undertaken to maintain and facilitate Paragon Group’s acquisition strategy. Despite our recent year-end acquisitions, the Group net debt multiple remains very low at 1.8 times EBITDA, leaving significant headroom for further market consolidation. Our net debt position at the end of June 2019 consequently remained low at €101 million.

Pre and post Statement of financial position acquisitions

Pre June 2019 year-end acquisitions led to our €933 million proforma turnover:

The key acquisitions completed as of June 2019, consisted of the acquisition of document and data management businesses from rcDDmn in Germany, with a turnover of €54 million; the acquisition in France of the document and marketing solutions business of Arvato Services, with a turnover of €29 million, the acquisition in the UK of the trade and assets of Howard Hunt Group, with a turnover of €28 million; along with the acquisitions of many smaller additional businesses such as Merico, Prisme Solutions, Harland Simon assets, Paperhat Communications, Magenta, Service Graphics, with a combined turnover of approx. €59 million.

Post June 2019 year-end acquisitions already brings us to a €1.2 billion proforma turnover:

On the 25th of October 2019, the Group acquired RR-Donnelly’s European Global Document Solutions (GDS) business. GDS has locations in the UK, France, Spain, Germany, Netherlands, Ireland, Poland and Italy and employs approximately 1,500 people with a turnover of €240 million in 2018. The acquisition of the RR-Donnelly’s Customer Communication activities in Europe also enabled Paragon Group to enter into a Strategic alliance with RRD, offering RRD’s global customers the largest solution and service platform in Europe. This deal has been considered as a significant post balance sheet event due to its size and commercial importance, both to the group and the readers of the annual financial statements.
On the 31st of October 2019, the Group also acquired Thames Technologies via Paragon ID. Thames Technologies has a turnover of €17 million and operates within the smart card market sector. Paragon ID is expected to expand within the retail and banking market sectors, capitalizing on its Rfid expertise. During the financial year 2018/2019, the Group also acquired 15 businesses through 10 acquisitions representing a total turnover of approx. €170 million. The proforma figures indicated in these financial statements reflect the impact of these acquisitions on a full 12 months basis but exclude the impact of the above-mentioned post balance sheet acquisitions of GDS and Thames Technologies.